ACCA Applied Skills · Corporate and Business Law (Global) · Fraudulent and criminal behaviour
Orion Ltd has gone into insolvent liquidation. The liquidator wishes to bring a claim for wrongful trading against the directors. Who is normally entitled to bring such a claim?
The liquidator brings a wrongful trading claim on behalf of the company, and any sum the court orders directors to contribute goes into the general assets for distribution among creditors. Individual creditors and shareholders cannot bring the claim themselves under the wrongful trading provisions.
- AAny unsecured creditor acting individually
- BThe liquidator of the companyCorrect
- CThe company's shareholders by ordinary resolution
Explanation
A wrongful trading claim is brought by the liquidator (or administrator) on behalf of the company, and any recovery goes into the company's assets for distribution to creditors. Individual creditors have no standing to sue under this provision. Shareholders cannot bring it because the remedy exists to protect creditors, not members.
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