Fraudulent Trading and Wrongful Trading Defence Lawyers

Fraudulent trading is a charge that is typically levied against directors whose business has been declared insolvent. The term ‘insolvent’ is used to refer to any business that is unable to pay its debts. As a consequence of being declared insolvent, businesses must cease trading with customers, and must prioritise the financial welfare of their creditors.

Here at Draycott Browne, we understand that being accused of or charged with fraudulent trading or creditor fraud is extremely stressful for those involved. Fraudulent trading is a criminal offence and those found guilty of the crime can receive a custodial sentence of up to ten years in prison. Due to the severity of the offence and its potential punishments, it is natural for those facing an insolvency charge to be anxious, frightened, and confused about their future.

If you are currently facing charges of fraudulent trading, you’ll need the help of a solicitor who has specialised in this area of Business Crime, and who has experience in providing tailored defences to those who have been charged with such offences, and that’s where we come in. Over many years of service, our specialist solicitors have successfully defended clients from throughout the UK against charges of fraudulent trading and creditor fraud, and we’re here now to help you. Our experience tells us that most cases of creditor fraud are not due to intentional fraud, but to poor management and hopeful intentions.

Whatever the circumstances of your charge, contact us today to speak to a member of our team.

What does trading insolvently mean?

Businesses are declared insolvent when they cannot pay back the debts they owe to creditors on time. When a company is declared insolvent, trading should stop. In all instances, an insolvency investigation will be carried out by a trained and licensed insolvency practitioner to ensure that the company is doing everything it can to protect the interests of its debtors. If your company is facing insolvency and you are about to undergo an investigation, our solicitors can help ensure you are doing everything in your power to avoid a wrongful trading or fraudulent trading conviction.

What is fraudulent trading?

Fraudulent trading is a criminal offence. After a company is made insolvent (or when it is clear that the company will be made insolvent) directors should cease to trade, and should make protecting the financial interests of their creditors their priority. Fraudulent trading is when directors purposely and deliberately continue to trade, accept credit supplies from creditors, or accept orders from customers, despite knowing that they cannot repay the creditors or provide the customers’ orders.

Other actions that could constitute fraudulent trading:

  • Refusing to follow their legal obligations by not notifying creditors of their insolvency and allowing the business to trade.
  • Continuing to trade despite knowing that trading invoices will not be settled.
  • Trading despite knowing they will never be in a position to settle the invoice.
  • Selling their company assets for less than the market value before the company’s liquidation is announced can also be considered fraudulent trading.

For a fraudulent trading charge to be successful, it has to be shown that the company’s director intentionally endeavoured to defraud creditors or customers for their own gain. When directors purposefully prioritise their own needs over their creditors and continue to trade at their creditors expense, their actions constitute fraudulent trading.

What is wrongful trading?

Wrongful trading is less serious than fraudulent trading. Unlike fraudulent trading, it is a civil offence rather than a criminal one, as per the Insolvency Act of 1986 and the Companies Act of 2006. In cases of insolvency, directors can be over-enthusiastic about their company’s business, with many failing to realise the severity and permanency of their decision. Wrongful trading is when directors continue to trade in the hope that they will be able to pull the company out of trouble through the income they bring in. Instead of putting their creditors’ needs first, they hope that their actions will have a positive impact on the company. While this still involves endangering their creditors, it isn’t fraudulent behavior, because the intent is not to deceive.

What if I’m arrested or charged for fraudulent trading?

If you are arrested or charged with an offence of fraudulent trading or creditor fraud, it is imperative that you are represented by a skilled and experienced solicitor who is knowledgable in this complex area of the law. The UK laws governing fraudulent trading and creditor fraud are complicated, and only a solicitor who is experienced in these matters will be able to assist you through the preliminary investigations.

If you are arrested and forced to attend a police interview, it is important that you enact your right to remain silent, and do not answer any questions asked of you until your solicitor is able to represent you. Under UK Law, you have the right to a solicitor, and the police station will likely offer you the services of their duty solicitor. However, it is worth noting that, due to the complexity of this area of fraud law, a duty solicitor is unlikely to have the training and experience required to help you. Our solicitors are fully experienced in handling fraudulent trading and creditor cases, having represented clients throughout the UK, and will be able to evaluate, assess and monitor your interview carefully to ensure you are treated fairly and stay clear of mistakes which would later be harmful to your case.

What is the sentence for fraudulent trading?

Fraudulent trading is a criminal offence and those charged with it can incur a custodial sentence of up to 10 years in prison. The maximum sentence will only be given when there is absolute proof that the director purposefully behaved in a manner that was financially reckless and harmful to its creditors and customers. For smaller offences, and offences which don’t involve large amounts of money, the sentence given is likely to span between two and three years.  We will be able to advise you of the likely outcome of your case, and give you a realistic view of any sentence you may expect to receive. While we work tenaciously to ensure you receive the best possible outcome in your case, we will also be honest and transparent throughout.

What mitigating circumstances may be considered?

If it becomes apparent that you will be found guilty and given a sentence, your solicitor will do all they can to reduce your sentence as much as possible, usually by making reference to mitigating factors. If your actions were a result of unforeseen circumstances and difficult financial times, then the judge may be more lenient. The Coronavirus pandemic resulted in changes to the laws governing wrongful and fraudulent trading that may apply to your business, and your solicitor may be able to use these laws to help you. What your role was in the defence may also be considered. Directors who state that they were unaware of their company’s financial status are still likely to face some charges since their job requires them to be responsible for the company’s finances and assets, but it may be possible to argue for wrongful rather than fraudulent trading. Once instructed, your criminal defence lawyer will work tirelessly to understand the circumstances of your case, and advise on the best path forward.

What will a solicitor do for me?

As your solicitor, we will use our knowledge of the complex laws surrounding fraudulent trading and creditor fraud, and our experience in handling cases of this nature, to help you receive the best possible outcome for your case.

  • We will represent you during any investigations and interviews to ensure you have advice and guidance every step of the way
  • Speak with you regularly and at length about your business and your case
  • View your company’s financial records so as to understand the technical intricacies of your case, often utilising the professional help of trained experts such as forensic accountants.
  • Consider the claims that have been made against you and carefully examine, analyse, evaluate and counter-evidence the evidence that is held against you
  • Communicate with the Insolvency Practioner who is conducting your insolvency investigation about your case
  • Provide you with legal advice that is easy to understand and not littered with confusing legal jargon so that you and your loved ones are fully informed of your situation
  • Use our experience and knowledge to provide you with options regarding your best possible course of action

Our expert and experienced team are here to help you today. Whether you’re facing insolvency or have been accused or charged with the crime, we’re here to help you. Contact us today.

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If you are under investigation for fraudulent trading or wrongful trading, contact our specialist criminal defence lawyers for advice today. Our Fraud Lawyers have significant expertise in these cases and will be able to provide you with the best-possible advice and support.

We take great pride in our dedication and professionalism. We are relentless in the pursuit of achieving the best result possible for all of our clients and will continuously work hard on your behalf with an attention to detail and tenacity that is second to none.

We have over 25 years of experience in this area of law. Our track record in even the most complex and sophisticated of cases shows that you’ll have the best possible chance of a successful outcome to the challenge you are facing.

Draycott Browne is one of the UK's top criminal defence law firms. We regularly provide specialist criminal defence representation in cases involving fraudulent trading to clients in Manchester, Liverpool, London, Birmingham and throughout the whole of England and Wales. When facing serious consequences, trust in Draycott Browne. You cannot afford to settle for anything less.

We are available 24 hours a day, 7 days a week, with solicitors committed to providing first-class representation for every client. If you or somebody you know has been arrested and needs expert legal representation, call Draycott Browne today on +44 (0)161 228 2244

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