Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
Check out our straightforward definitions of common legal terms.
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Access our unrivalled global news content, business information and analytics solutions
Insurance, risk and compliance intelligence using big data, proprietary linking and advanced analytics.
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
Simon Hunter, barrister at Three Stone, explores Nicholson v Fielding and suggests the decision highlights the importance of properly quantifying a wrongful trading application.
Re Main Realisations Ltd (in liquidation); Nicholson and another v Fielding and others  Lexis Citation 313,  All ER (D) 156 (Oct)
The Companies Court refused the liquidators’ application under section 214 of the Insolvency Act 1986 (IA 1986) for a declaration that the respondent company directors were liable to make contributions to the company’s assets for having wrongfully allowed it to continue trading when they knew or should have known there was no reasonable prospect of it avoiding going into insolvent liquidation. The court held that, on the evidence, the respondents had no knowledge that the company had no reasonable prospect of avoiding insolvent liquidation and an objective director would not have concluded it was doomed.
Inevitably the outcome in this case turns on its particular facts. It is not, though, without considerable wider relevance. The importance of this judgment is in the comments of the deputy registrar in relation to the fourth issue (see below). It is a salutary lesson to practitioners (and their lawyers) to ensure that claims which they bring are quantified on a proper basis and that that quantification is backed up by evidence.
In a claim for wrongful trading this quantification must be undertaken particularly carefully. It is established that where there is no sufficiently detailed financial information allowing a calculation of the net deficiency between the relevant date and the date of the liquidation, the court can take the actual net deficiency between two other dates and pro rata it to the correct period. This, albeit in a rather tangential way, appears to be what happened in this case.
As the deputy registrar in this case accepted, though, that is only an approach to be used where there is no sufficiently detailed financial information. The court should be cautious of the approach where there is no good explanation why there is not a proper deficiency account. In this case, the third respondent had kept exemplary accounting records. There was no reason why a proper deficiency account could not have been created showing the actual increase in the deficiency caused by the alleged wrongful trading. The deputy registrar commented that comparing the October 2008 accounts (prepared on a going concern basis) with the statem
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234