LEXLAW Solicitors & Barristers
When a company enters liquidation, the liquidator investigates the conduct of its directors and can pursue personal claims for misfeasance, wrongful or fraudulent trading, preferences, transactions at an undervalue and transactions defrauding creditors. This succinct guide explains each claim and, crucially, how a director can defend it.
Directors who continue trading after they knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation or administration may face personal liability under section 214 of the Insolvency Act 1986. During the period in which a company is insolvent or nearing insolvency, directors’ decisions may also come under closer scrutiny, particularly where losses to creditors increase.
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