Wrongful trading : problems and proposals

The aim of this article is to examine the issues that exist in relation to the bringing of actions for wrongful trading in the UK, and to determine if the law should be reformed. It is argued that because of the way that the wrongful trading provision has been drafted and applied by the courts, it does not achieve what was intended when introduced, for it does not provide the liquidator with an effective weapon in recovering funds for the benefit of creditors and it fails to act as a mechanism that will encourage directors to minimise losses to creditors. As a result the article submits that reforms are needed.