Action by Liquidator against directors for wrongful trading. The court was asked Whether the liquidators had established continued trading causing a loss to company in order to attribute personal liability on the directors.
Held: Section 214(3) was intended to impose a high hurdle on the directors, being construed strictly it would require a director seeking to rely on that the defence to show not only that continued trading was intended to reduce the net deficiency of the company, but also that it was designed appropriately so as to minimise the risk of loss to individual creditors. If not, then a director could make out the defence under section 214(3) by claiming that he traded on with a view to reducing the overall deficiency by creditors as a general body, irrespective of how he achieved that result as between creditors.
Snowden J
[2016] EWHC 243 (Ch), [2016] 1 Costs LR 185, [2016] BCC 293, [2016] WLR(D) 69, [2016] Bus LR 555
Bailii, WLRD
Insolvency Act 1986 214
England and Wales
Insolvency
Updated: 10 January 2022; Ref: scu.560087
