Wrongful trading: two recent cases

WALTERS, A., 2001. Wrongful trading: two recent cases. Insolvency Lawyer, 6, pp. 211-214. ISSN 1350-5211

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Abstract

The purpose of this short note is to alert readers to two recent cases concerning directors' liability for wrongful trading. By way of reminder, the court's discretion to order a person to contribute personally to the assets of the company is only triggered if the company's liquidator can establish that: (a) the company has gone into insolvent liquidation (meaning that its assets are insufficient for the payment of its debts, other liabilities and the expenses of winding-up); and (b) at some time before the commencement of the winding-up of the company, the defendant knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation; and (c) the defendant was either a director or shadow director of the company at that time.1 If these elements are established the court may make an order, but is not bound to do so. A defence is available if the defendant establishes that having reached the state of knowledge referred to in (b), he or she took every step with a view to minimising the potential loss to the company's creditors that he or she ought to have taken. In practice, the key substantive element is (b) as the matters in (a) and (c) will usually be self-evident.

Item Type: Journal article
Publication Title: Insolvency Lawyer
Creators: Walters, A.
Publisher: Sweet & Maxwell/Thomson Reuters
Place of Publication: London
Date: 2001
Volume: 6
ISSN: 1350-5211
Rights: Permission is for Nottingham Trent University’s Institutional Repository only. Any further use (including storage, transmission or reproduction by electronic means) shall be the subject of a separate application for permission.
Divisions: Schools > Nottingham Law School
Depositing User: EPrints Services
Date Added: 09 Oct 2015 10:21
Last Modified: 09 Jun 2017 13:27
URI: http://irep.ntu.ac.uk/id/eprint/11698

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