Editing Trading while insolvent (section)

==UK law==
Under [[UK insolvency law]], trading once a company is legally insolvent can trigger several provisions of the [[Insolvency Act 1986]], including:<ref>{{cite web|title=Insolvency Act 1986|url=http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/uk/insolvencyact.pdf|archive-url=http://webarchive.nationalarchives.gov.uk/20110709051253/http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/uk/insolvencyact.pdf|url-status=dead|archive-date=9 July 2011|website=Insolvency.gov.uk|publisher=UK Statutes Crown|accessdate=29 July 2014}}</ref>

*[[Wrongful trading]]&nbsp;– Section 214
*[[Undervalue transaction|Transaction at an undervalue]]&nbsp;– Section 238
*[[Unfair preference|Preferences]]&nbsp;– Section 239
*Extortionate credit transactions&nbsp;– Section 244

A limited company becomes [[insolvent]] when it can no longer pay its bills when due, or its liabilities—including [[contingent liabilities]] such as [[redundancy payments]]—outweigh the company’s assets. This is a critical point in the lifespan of a company as it denotes when the [[Director (business)|directors]]' responsibilities move from the interests of [[shareholders]] to the interests of [[creditors]]. It also means that the directors need to be extremely careful when considering whether to continue to trade, or not. Any director who knows that the company is insolvent and makes the decision to continue to [[trade]], and in doing so increases the debts of the company can be made liable for the company debts.<ref>{{cite web|title=Trading whilst insolvent|url=https://www.companyliquidation.solutions/trading-whilst-insolvent-wrongful-trading/|accessdate=14 November 2016}}</ref>

In the UK, directors are exposed in respect of transaction at an undervalue, preferences, and extortionate credit transactions if the transaction occurred: a) while the company was insolvent; and b) within 2 years before the onset of liquidation if the transaction was with a connected person, and 6 months if the transaction was with an unconnected person.

Directors who continue to trade while insolvent may face disqualification under the [[Company Directors Disqualification Act 1986]].<ref>{{cite web|title=Company Directors Disqualification Act 1986|url=http://www.legislation.gov.uk/ukpga/1986/46/contents|website=legislation.gov.uk|publisher=Crown|accessdate=30 July 2014}}</ref> Under the provision of this act, when a company goes into [[liquidation]], the liquidator must make a report to the Disqualification Unit of the [[Department for Business, Innovation and Skills]] on the conduct of all directors. If the liquidator has come across any conduct which makes the director unfit to be involved in the management of a company in the future (which things would include trading while insolvent) the Department for Business, Innovation and Skills will apply to the Court for an order disqualifying the director or directors from acting as a [[Board of directors|company director]] for a certain period of time.