Trading while insolvent
Continuing to operate a business when it is insolvent. This is not automatically unlawful, but directors must act carefully and comply with duties to creditors.
Related terms
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Insolvent trading
A broad expression for continuing to trade while financially insolvent. The legal consequences depend on the director’s conduct and the specific statutory rules involved.
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Duty to creditors
The principle that directors must give increasing weight to creditors’ interests when insolvency is probable or the company is insolvent.
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Wrongful trading
A potential claim against directors who kept trading when they knew, or should have known, insolvent liquidation or administration could not reasonably be avoided and failed to take appropriate steps.
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