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If found liable for wrongful trading (section 214 Insolvency Act 1986) this liability will be ‘compensatory’ in nature.
If found guilty of fraudulent trading (section 213 Insolvency Act 1986) this liability may be punitive in nature.
[See ‘Director’, ‘Liquidation’, ‘Limited Liability’, ‘Wrongful Trading’ and ‘Fraudulent Trading’.]
A debtor is made Bankrupt on the date of the Bankruptcy Order. At that time a Trustee in Bankruptcy will be appointed over their case and all of the Bankrupt’s property will vest in (pass to) them.
The Bankruptcy will usually last 12 months from the date of the Bankruptcy Order (an end date that can be extended, if the Bankrupt has acted wrongly, negligently, etc.) and at this time the Bankrupt will be ‘discharged’. Their remaining debts will be extinguished and they are released from the charge of the Trustee.
[See ‘Bankrupt’, ‘Trustee in Bankruptcy’ and ‘Bankruptcy Order’.]
A Liquidator can disclaim any unprofitable contract or any property in a company’s estate which is not realisable or saleable. This is if it is ‘onerous’.
Section 178(3) Insolvency Act 1986 states that ‘onerous property’ is, amongst other things, that which may give rise to a liability to pay money. An example of this is an expensive vehicle purchase contract, the lease of a 3D printer, or a lease with an extended unexpired period.
The effect of disclaimer is to discharge the company (and so the Liquidator) from any future liability in respect of that contract or property …
… but any amount up to the date of disclaimer is still provable by the creditor as an unsecured claim.
Disclaimer will determine (end/terminate), as from the date of the disclaimer, the rights, interests and liabilities of both the Liquidator and the landlord (in a case of
