Fraudulent or wrongful trading allows contribution orders against those knowingly involved in defrauding creditors during insolvency. The provision empowers the Adjudicating Authority, during corporate insolvency resolution process or liquidation, to require persons knowingly involved in carrying on the corporate debtor's business with intent to defraud creditors or for any fraudulent purpose to contribute to the corporate debtor's assets as deemed fit. It also permits contribution orders against a director or partner who knew or ought to have known that insolvency could not be avoided and failed to exercise due diligence to minimise creditor loss, subject to the specified suspension bar on applications.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Fraudulent or wrongful trading allows contribution orders against those knowingly involved in defrauding creditors during insolvency.
The provision empowers the Adjudicating Authority, during corporate insolvency resolution process or liquidation, to require persons knowingly involved in carrying on the corporate debtor's business with intent to defraud creditors or for any fraudulent purpose to contribute to the corporate debtor's assets as deemed fit. It also permits contribution orders against a director or partner who knew or ought to have known that insolvency could not be avoided and failed to exercise due diligence to minimise creditor loss, subject to the specified suspension bar on applications.
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