Quantifying a wrongful trading application (Nicholson v Fielding)

What practical lessons can restructuring and insolvency professionals take away from this judgment?

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