ACC 312 Study Guide - Midterm Guide: Insolvency Act 1986, Wrongful Trading, Liquidation
Document Summary
A (cid:272)o(cid:373)pa(cid:374)y (cid:271)e(cid:272)o(cid:373)es i(cid:374)sol(cid:448)e(cid:374)t (cid:449)he(cid:374) it is u(cid:374)a(cid:271)le to pay (cid:272)reditors(cid:859) de(cid:271)ts in full after realisation of all the assets of the business. The penalties imposed on directors of companies continuing to trade, whilst insolvent, may be disqualification and personal liability. The insolvency act 1986 provides guidance on matters to be considered by liquidators and receivers in the reports, which they are required to prepare on the conduct of directors. Breaches of fiduciary and other duties to the company. Misapplication or retention of monies or other property of the company. Causing the company to enter into transactions which defrauded the creditors. Failure to keep proper accounting and statutory records. Failure to make annual returns to the registrar of companies and prepare and file annual accounts. A major innovation of the insolvency act 1986 was to create the statutory tort (civil wrong) of wrongful trading.
