Insolvent trading liability
When directors can become personally liable for debts incurred while insolvent.
The duty
Directors have a duty to prevent the company incurring debts when there are reasonable grounds to suspect it is insolvent, or would become insolvent by incurring the debt. A breach can expose directors to personal liability for those debts, as well as civil penalties.
Defences and Safe Harbour
The law provides certain defences, and Safe Harbour can protect directors who are developing and pursuing a course of action reasonably likely to lead to a better outcome. Conditions apply — getting advice early matters.
General information only — not legal or financial advice. Any figures or time limits are indicative and can change. Every situation is different; speak with us about yours.