Definition: is a process that occurs when the management allows a company to continue performing trading operations under circumstances, in which a reasonably careful individual would understand that the company’s insolvency is unavoidable. In certain countries, the members of a board of directors who are aware (or should be aware) that their firm’s insolvency is inevitable are held personally liable for its debts to its creditors if their business is liquidated or files for bankruptcy.
In a Sentence:
The management of Drive Optima has no shame, as they conducted wrongful trading, all the way knowing that they will go out of business in the next three months.
To avoid a situation, in which Krate Store would be performing wrongful trading, the company ceased all of its operations and started preparing for declaring bankruptcy.
The wrongful trading done by our firm has come back to haunt us. The firm’s creditors have threatened to sue the board for not informing them about the upcoming insolvency of our business.
Synonyms and related words: fraudulent trading, insolvent trading, company insolvency, disqualification of directors