Help both me and my client

Advise on the personal risks to the directors of trading whilst insolvent is often a misunderstood area of the law.

To complicate matters there is also the theory and the practice:

1. Understand the risks

The risks to directors can be substantial, particularly once insolvency is known or should be known, and the liability can be that the court makes the directors contribute personally to the additional losses incurred.

Directors often face a dilemma that whilst they have confidence that they can turn the business around they also don’t want to put themselves personally at risk if things don’t work out as intended. The risks include having to make a financial contribution to the company’s creditors, disqualification or even a criminal prosecution.

2. Minimise the risks

One of the key defences to a ‘wrongful trading action’ is showing that expert professional advice has been obtained and followed. Understanding this specific area of law and knowing how it works in practice, we are ideally positioned to provide protective advice. 

In addition to the risk as regards ‘wrongful trading’ directors can often find themselves exposed to remedy the consequences of transactions and actions that, whilst carried out with the best intentions, contravene the complex and often misunderstood insolvency laws, relating to preferences, transactions at an undervalue or reuse of a company name or trading style. We can provide comforting advice to minimise the risks.