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Which of the following may be found liable for fraudulent trading under s.213 Insolvency Act 1986?
(1) Creditors
(2) Employees
(3) Shareholders
A (3) only
B (1) and (2) only
C (1), (2) and (3)
D (2) and (3) onlyHi sir, I only knew that employees and shareholders are liable for fraudulent trading. Could you explain why the answer was C? Why are creditors also liable?
Thank you sir
If creditors (or one or some of them) are knowingly party to the company carrying on trading whilst insolvent then “the liquidator may apply to the court for an order any persons who were knowingly parties to the carrying on of such business are to be made liable to make such contributions (if any) to the company’s assets as the court thinks proper.”
Strange, but true
OK?
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