Fraudulent Trading Legal Advice

Fraudulent trading is an abuse of position of responsibility or power at the corporate level, carried out by a director, high-level employee or former employee which results in the business suffering financial loss.

Insolvency fraudulent trading

Fraudulent trading is the most serious form of insolvent trading (which also covers wrongful trading, which is less serious that fraudulent trading.

Fraudulent trading is serious criminal offence under UK law that can carry a prison sentence of up to 10 years.

Key aspects of fraudulent insolvent trading are :-

• when a company director knowingly carries on business with the intention of defrauding creditors; and

• the director is aware that the company is insolvent or likely to become insolvent, but continues to trade anyway without taking steps to protect creditors' interests.  

Examples of fraudulent trading can include:

• Continuing to trade when the company is insolvent and unable to pay its debts.  

• Using company funds for personal purposes instead of paying creditors.

• Borrowing money from creditors without any intention of repaying it.

• Misrepresenting the company's financial position to creditors.

When a company is liquidated, the appointed Insolvency Practitioner is duty bound to investigate the directors conduct in the lead up to insolvency.

If the Insolvency Practitioner believes there has been fraudulent trading he or she may start civil proceedings against the director and/or refer the matter on for potential criminal law proceedings.

How we can help

We have a team of insolvency and fraud specialist lawyers. We act for company directors facing allegations of fraudulent trading and also for Insolvency Practitioners who want specialist and experienced lawyers on side before taking action.

Please do call or email to discuss your situation in the strictest confidence.