Wrongful Trading: Financial Position Analysis at Key Dates
Insolvency
Background
A liquidator brought wrongful trading proceedings against the directors of an insolvent company, alleging they continued to trade after the point of no return.
Instruction
Instructed by defence solicitors to assess the financial position of the company at successive dates and identify the earliest point at which insolvent liquidation was inevitable.
Approach
Reconstructed the company's financial position at monthly intervals using management accounts, bank statements, and creditor records; applied both the balance sheet and cash flow solvency tests; assessed the impact of proposed restructuring options.
Outcome
Sterling Forensic's analysis identified a later date of insolvency than the liquidator had alleged, significantly reducing the quantum of the wrongful trading claim. The matter settled prior to trial.
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