Fraudulent trading claims under sections 213 and 246ZA of the Insolvency Act 1986


Published by a ³ÉÈËÓ°Òô Restructuring & Insolvency expert
Practice notes

Fraudulent trading claims under sections 213 and 246ZA of the Insolvency Act 1986


Published by a ³ÉÈËÓ°Òô Restructuring & Insolvency expert

Practice notes
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A Fraudulent trading claim arises under two separate statutory routes:

  1. •

    it is a criminal offence under section 993 of the Companies Act 2006

  2. •

    a civil remedy arises under sections 213 and 246ZA of the Insolvency Act 1986 (IA 1986)

This Practice Note deals with the latter.

What is fraudulent trading?

Fraudulent trading is a claim which arises under IA 1986, s 213 (Liquidation) or IA 1986, s 246ZA (administration) and seeks to recover property to the company's assets where:

  1. •

    the company has been wound up or entered administration, and

  2. •

    the business of the company was carried on with the intent:

    1. â—¦

      to defraud its creditors, and/or

    2. â—¦

      to defraud creditors of any other person(s), and/or

    3. â—¦

      for any other fraudulent purpose(s)

In the circumstances, negligence or incompetence will not be sufficient.

Who can commence a fraudulent trading claim?

Historically, fraudulent trading claims could only be brought by a liquidator.

However, since 1 October 2015 both liquidators and administrators

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Key definition:
Fraudulent trading definition
What does Fraudulent trading mean?

The carrying on of the business of a company with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent effect, as set out under the Insolvency Act 1986, s 213.

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