Trading While Insolvent: Legal Risks UK Directors Must Understand


Running a business is never easy. Markets change, costs rise, and sometimes cash simply runs out faster than it comes in. For many company directors, it can be difficult to know whether a financial problem is temporary or whether the business is sliding into insolvency. What is certain, however, is that the moment a company is unable to pay its debts as they fall due, or its liabilities outweigh its assets, it is deemed to be insolvent under UK law. If a director continues trading once the company is insolvent, serious legal risks arise. Trading while insolvent can expose directors to personal liability, director disqualification, and even accusations of wrongful or fraudulent trading. This article explains what trading while insolvent really means, the potential consequences, and how directors can act responsibly to protect themselves.


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