If a company becomes insolvent and goes into liquidation, a director may be deemed personally liable for ‘wrongful trading’.
This happens if it can be shown that, at some time before winding up proceedings began, they knew (or should have known) that there was no reasonable prospect of the company avoiding insolvent liquidation. In these circumstances a court can order the directors to make a contribution to the company’s assets.
The only defence to wrongful trading is if you can show that you took every action possible to minimise the potential loss to the company’s creditors. This makes it essential that as a director you have properly documented all the steps when your company faces the threat of insolvency.
How we can help
This is where Else Solicitors can help by advising you from the outset on best practice and compliance procedures. We have experience of representing directors when their interests are different from the company, or where proceedings have been threatened or taken against them personally.
Our expert team understands the complexities and challenges when proceedings involve international trade or serious allegations such as bribery, fraud and corruption.
We can provide clear, jargon-free explanations of directors and officers liabilities and compliance procedures and review all your existing procedures and processes in a bid to avoid future problems.
We have experience of boardroom reorganisations and directors’ disqualification proceedings as well as involvement in investigations of business crime and professional negligence allegations.
To speak to a solicitor who specialises in wrongful trading and directors liabilities cases, please contact the insolvency and business recovery team on 01283 526200, alternatively you can send us a message and we will get in touch at a time that suits you.