Wrongful trading and the duties that accompany insolvency turn on a date that nobody wrote down: the moment there was no reasonable prospect of avoiding an insolvent liquidation.

Directors almost never identify it at the time. They identify a bad month, then a worse quarter, and a series of decisions each of which looked defensible on its own. The court reconstructs the date afterwards from the documents.

Those documents are usually the board papers, the management accounts, and the correspondence with the bank — and they are generally more useful to an office-holder than to the directors who created them.

The practical advice for a director is to take advice early and to record the reasoning at the time. A contemporaneous note explaining why continuing to trade was reasonable is worth considerably more than a witness statement written two years later.

Fixing the date

The duty shifts at the moment there was no reasonable prospect of avoiding insolvent liquidation. Nobody records it. The court reconstructs it from the management accounts, the board papers, and the correspondence with the bank.

What the documents show

Those documents are generally more useful to an office-holder than to the directors who created them, because they capture optimism that later looks like a failure to face facts. A contemporaneous note explaining why continuing to trade was reasonable is worth considerably more than a witness statement written two years later.

Funding the claim

We advise on ATE cover, litigation funding and the assignment of claims as part of the merits view rather than after it. A good claim the estate cannot afford to run is not an asset, and the funding position often determines which claims are worth pleading.

Restructurings leave residue

Challenges to a plan, disputes between creditor classes, and the consequences of arrangements agreed under time pressure all outlive the restructuring itself. We are instructed on those about as often as on the restructuring.