Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › KIT QUESTION -v WRONGFUL TRADING
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MikeLittle.
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- November 29, 2017 at 4:32 pm #418921
Fran and Gram registered a private limited company, Ire Ltd, in January 2009, with each of them becoming a
director of the company.
Although the company did manage to make a small profit in its first year of trading, it was never a great
success and in its second year of trading it made a loss of £10,000.
At that time Fran said he thought the company should cease trading and be wound up. Gram, however, was
insistent that the company would be profitable in the long term so they agreed to carry on the business, with
Fran taking less of a part in the day-to-day management of the company, although retaining his position as a
company director.
In the course of the next three years Gram falsified Ire Ltd’s accounts to disguise the fact that the company
had continued to suffer losses, until it became obvious that he could no longer hide the company’s debts
and that it would have to go into insolvent liquidation, with debts of £100,000.Sir in the above Scenario , as far as wrongful trading is concerned, only Fran would be liable for wrongful trading? Or both Gram and Fran would be liable for wrongful trading?
November 29, 2017 at 6:09 pm #418960Both fully liable although Gram more liable than Fran so the Court would likely draw that distinction of respective culpability
OK?
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