What is "Wrongful" or "Fraudulent" Trading?
Both these matters are dealt with in the Insolvency Act 1986 and are serious matters. So, should you be experiencing financial difficulties getting prompt advice from an insolvency professional is important.
Wrongful Trading (s214)
This is where a director has allowed a company to continue trading in circumstances where he should have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation.
The directors involved may be made personally liable to make a contribution to the company’s assets, unless the Court is satisfied that he took every step with a view to minimising the potential loss to the company's creditors as he ought to have.
Fraudulent Trading (s213)
This where a company has been allowed to carry on business with intent to defraud creditors, or for any fraudulent purpose.
It is a criminal offence and those involved can be made personally liable for the company’s liabilities.
If you are at all concerned, then take advice...
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