Wrongful Trading - Who May Be Liable?

Who May Be Liable?

Section 214 Insolvency Act 1986 has very wide scope, since it applies not only to de jure directors (that is directors who were formally appointed and their appointment was registered with Companies House. It can apply to de facto directors (that is people who assumed the role of director of a company without being appointed), or shadow directors (that is people in accordance with whose direction the de jure directors were accustomed to act.

Initially, there was uncertainty among banks and insolvency and restructuring professionals who assisted and advised companies facing insolvency that they may be caught by the wrongful trading provisions. This has not proved to be the case (as of July 2006), and professionals are unlikely to be covered by these provisions except in exceptional circumstances.