ABSTRACT
The chapter introduces s 214 of the Insolvency Act 1986, which gives liquidators the power to bring proceedings against directors for what is usually known as wrongful trading. Administrators also have the same power under s 246ZB of the Act. The chapter explains the background to the introduction of s 214, noting the concern that there was over the heavy burden on liquidators successfully making out a civil case for fraudulent trading and the fact that there was no provision that addressed directors who did not act fraudulently but continued the business of their companies in irresponsible ways. The chapter then goes on to explain the aims in, and rationale for, the introduction of s 214. Importantly, the provision was not aimed primarily at making directors pay for wrongful trading, but to encourage directors to ameliorate the way that they run their companies when financial distress hits.
