ABSTRACT
Section 214 of the Insolvency Act 1986 extends liability to directors or shadow directors who should know, or ought to have concluded, that there was no reasonable prospect that the company would avoid going into insolvent liquidation from the previous law which only penalised fraudulent trading where a person trading through the medium of the company actually knew that the company could not pay its debts. Section 214 therefore extends liability to the situation where a person ought to have realised that the company could not pay its debts. The section is, however, limited to directors and shadow directors. Furthermore, there is no criminal provision as there is for fraudulent trading (s 458 of the Companies Act 1985).
