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What is fraudulent trading? If you are a creditor of an insolvent company or a bankruptcy, Oliver Elliot can help you address your claim and concerns arising from the insolvency.

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Fraudulent Trading is the intention of defrauding creditors.

It is the action by a director of a company of carrying out its business with the discrete intention of defrauding its creditors. If found to have acted in such a manner a director will be liable to contribute to the assets of the company as the court thinks fit as set out in Section 213 of the Insolvency Act 1986.

Fraudulent Trading also arises if trading is undertaken for a fraudulent purpose.

This is more serious than Wrongful Trading because generally there is an element of dishonesty shown.

Wrongful trading is a less serious and more common offence, which can lead to a custodial sentence, director disqualification and financial penalties.

Directors involved in a Creditors Voluntary Liquidation or a compulsory liquidation process are always questioned by the liquidator as he or she must conduct an investigation and send a report to the Secretary of State on director conduct leading up to the company’s insolvency.

If fraudulent trading is suspected, directors have acted deliberately to avoid payment of company liabilities by continuing to trade, accepting supplier credit or taking payment on credit from customers knowing that orders will be unfulfilled prior to liquidation. Selling company assets for “undervalue” or lower than their market value prior to the liquidation is also considered suspect by the liquidator.

If you are in anyway concerned that you could be accused of wrongful or fraudulent trading in the near future, call us today on 020 3925 3613, or to to participate in a free consultation. We’ll help you assess your current risk level and consider with you a plan of action.

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Disclaimer: What Is Fraudulent Trading?

This page: What Is Fraudulent Trading? is not legal advice and not to be relied upon as such. If in doubt you should take independent professional advice on the facts of your case. This guide is just a guide, for information purposes only. No liability is accepted for any reliance placed upon it.