wrongful trading

Wrongful trading occurs when a company continues to trade while knowing, or should have known, that it was insolvent, meaning it couldn't pay its debts. Directors have a legal duty to avoid reckless conduct that could worsen the company's financial situation. If a company goes into bankruptcy, directors can be held personally liable for financial losses incurred during this period. This law aims to protect creditors and ensure that company directors act responsibly, prioritizing the financial health of their business and the interests of stakeholders.