Fraudulent and Wrongful trading 8 / 8

Fraudulent trading

Directors continue business, defrauding creditors

  1. The directors must have acted dishonestly

  2. The directors must have intended to make a gain for themselves

Remedies

  1. If Criminal prosecution Max 10 years in prison and/or a fine

  2. If Civil action (insolvent liquidation) 'make such contribution to the company's assets as the court thinks proper'

Wrongful Trading

When can't prove fraudulent trading

Directors continue business - knowing (or should have) no reasonable prospect of avoiding insolvent liquidation

Not taking reasonable steps to avoid losses for creditors

Remedy is civil - 'make such contribution to the company's assets as the court thinks proper'

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