Insolvent Trading in UK Law

Leading Cases
  • Colin Gwyer & Associates Ltd v London Wharf (Limehouse Ltd)
    • Chancery Division
    • 13 Diciembre 2002

    Where a company is insolvent or of doubtful solvency or on the verge of insolvency and it is the creditors' money which is at risk the directors, when carrying out their duty to the Company, must consider the interests of the creditors as paramount and take those into account when exercising their discretion.

  • Secretary of State for Trade and Industry v Deverell and Another
    • Court of Appeal (Civil Division)
    • 21 Diciembre 1999

    (2) The purpose of the legislation is to identify those, other than professional advisers, with real influence in the corporate affairs of the company. (2) The purpose of the legislation is to identify those, other than professional advisers, with real influence in the corporate affairs of the company.

  • Re Sevenoaks Stationers (Retail) Ltd
    • Court of Appeal (Civil Division)
    • 31 Julio 1990

    Mr. Cruddas made a deliberate decision to pay only those creditors who pressed for payment. The obvious result was that the two companies traded, when in fact insolvent and known to be in difficulties at the expense of those creditors who, like the Crown, happened not to be pressing for payment. Such conduct on the part of a director can well, in my judgment, be relied on as a ground for saying that he is unfit to be concerned in the management of a company.

  • Stone and Rolls Ltd ((in Liquidation)) v Moore Stephens (A Firm)
    • House of Lords
    • 30 Julio 2009

    The company is not fixed with its directors' fraudulent intentions because that would be unjust to its innocent participators (honest directors who were deceived, and shareholders who were cheated); the guilty are presumed not to pass on their guilty knowledge to the innocent.

    It was argued for the appellants that the public policy defence should not bar claims brought by a company in insolvent liquidation, where the creditors were innocent parties who had been defrauded by Mr Stojevic. Apart from special statutory claims in respect of misfeasance, wrong trading and so on, it cannot assert any cause of action which it could not have asserted before the commencement of its liquidation, as Mr Brindle concedes.

  • Bilta (UK) Ltd (in Liquidation) v Nazir
    • Supreme Court
    • 22 Abril 2015

    Most codes of insolvency law contain provisions empowering the court to make orders setting aside certain classes of transactions which preceded the commencement of the liquidation and may have contributed to the company's insolvency or depleted the insolvent estate. They will usually be accompanied by powers to require those responsible to make good the loss to the estate for the benefit of creditors.

  • Ward v Aitken and Others ; Re Oasis Merchandising Services Ltd
    • Court of Appeal (Civil Division)
    • 09 Octubre 1996

    We respectfully agree, supporting as it does the distinction which we would draw between the property of the company at the commencement of the litigation (and property representing the same) and property which is subsequently acquired by the liquidator through the exercise of rights conferred on him alone by statute and which is to be held on the statutory trust for distribution by the liquidator.

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  • Small Business, Enterprise and Employment Act 2015
    • UK Non-devolved
    • 1 de Enero de 2015
    ... ... ' drafts) ;(v) providing guarantees or commitments;(vi) financial trading (as defined in subsection (2) ) ;(vii) participating in issues of any kind ... (8ZA) Order disqualifying person instructing unfit director of insolvent company“(1) The court may make a disqualification order against a person ... ...
  • The Insolvency (England and Wales) Rules 2016
    • UK Non-devolved
    • 1 de Enero de 2016
    ... ... in which liquidators and trustees are to act in relation to the insolvent company's or bankrupt's books, papers and other records, and the manner of ... must also state—(a) its registered office;(b) any principal trading address if this is different from its registered office;(c) any name under ... ...
  • Bankrupt and Insolvent Act 1857
    • UK Non-devolved
    • 1 de Enero de 1857
    ... ... be necessary for the Purpose of supporting and continuing any Proceedings taken or to be taken after the Commencement of this Act upon any Trading, Act of Bankruptcy, Petitioning Creditor's Debt, Commission, or other Proceeding in Bankruptcy before the Commencement of this Act, and except also ... ...
  • Bankruptcy (Scotland) Act 2016
    • Scotland
    • 1 de Enero de 2016
    ... ... creditor, or qualified creditors, if the debtor is apparently insolvent,(ii) ... (iii) ... to a claim submitted by a creditor under section 46 or 122,(h) trading at a time before the date of sequestration when the debtor knew, or ought ... ...
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Books & Journal Articles
  • What Can We Expect to Gain from Reforming the Insolvent Trading Remedy?
    • No. 78-1, January 2015
    • The Modern Law Review
    This paper argues that reform of the wrongful trading remedy in section 214 of the Insolvency Act 1986 is unlikely to yield significant increases in civil recovery for creditors of insolvent compan...
  • The Public Enforcement of Sanctions against Illegal Phoenix Activity: Scope, Rationale and Reform
    • No. 44-2, June 2016
    • Federal Law Review
    • 0000
    The loss suffered by unsecured creditors of all insolvent companies is the non-payment in full of amounts rightfully owed to them. This loss is all the more unacceptable to creditors when a company...
    ... ... The loss suffered by unsecured creditors of all insolvent companies is the non-payment  ... duties or insolvent trading. Such an action may be instigated by the liquidator and by  ... ...
    • No. 78-6, November 2015
    • The Modern Law Review
    ... ... illiams ,R ichard What Can We Expect to Gain from Reforming the Insolvent Trading Remedy? 55 CONTRIBUTORS OF REVIEW ARTICLES B ustamante ,T homas ... ...
  • Secretary of State for Trade and Industry v Baker & Others
    • No. 6-1, January 1998
    • Journal of Financial Regulation and Compliance
    • 85-89
    This case arose from the 1995 collapse of the Barings Banking Group caused by the enormous losses resulting from Nick Lee‐son's unauthorised derivatives trading in Singapore, while general manager ...
    ... ... losses resulting from Nick Lee-son's unauthorised derivatives trading in Singapore, while general manager of Bar-ings Futures (Singapore) Ltd ... it is the duty of the court to disqualify unfit directors of insolvent companies: 's6(l) The court shall make a disqualifi-cation order against a ... ...
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Law Firm Commentaries
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