Defence to Insolvent Trading Actions

Are you a director and think your company incurred a debt whilst it was insolvent? Do you have any defences that would prevent you from being personally liable? Yes, there are defences.

Section 588H allows for the following defences to be made by a director:

  • There were reasonable grounds to expect solvency;
  • It was reasonable to rely on information from a competent and reliable manager;
  • The director was not involved in management because of illness or for some other good reason;
  • All reasonable steps were taken to prevent the company incurring the debt.

These defences are not available in criminal proceedings based on dishonesty.

If you are facing an insolvent trading action and you want to speak to an expert about possible defences why not call one of our experts for CONFIDENTIAL FREE ADVICE.

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