Wrongful trading is a type of civil wrong found in UK insolvency law, under Section 214 Insolvency Act 1986. It was introduced to enable contributions to be obtained for the benefit of creditors from those responsible for mismanagement of the insolvent company. Under Australian insolvency law the equivalent concept is called "insolvent trading". The Insolvency Act 1986 The principle of wrongful trading was introduced in the Insolvency Act 1986, to complement the concept of fraudulent trading. Unlike fraudulent trading, wrongful trading needs no finding of 'intent to defraud' (which requires a heavy burden of proof). Wrongful trading is therefore a less serious, and more common offence than fraudulent trading. Under UK insolvency law, wrongful trading occurs when the directors of a company have continued to trade a company past the point when they: "knew, or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation"; and they did not take "every step with a view to minimising the potential loss to the company’s creditors". Wrongful trading is an action that can be brought only by a company's liquidator, once it has gone into insolvent liquidation. (This may be either a voluntary liquidation - known as Creditors Voluntary Liquidation, or compulsory liquidation). It is not available to the directors of a company while it continues in existence, or to other insolvency office-holders such as an administrator. A limited company becomes insolvent when it can no longer pay its bills when due, or its liabilities; including contingent liabilities such as redundancy payments, outweigh the company's assets. This is a critical point in the lifespan of a company as it denotes when the directors responsibilities change from protecting the interests of the shareholders to protecting those of the creditors. It also means that the directors need to be extremely careful when considering whether to continue to trade, or not. Any director who knows that the company is insolvent and makes the decision to continue to trade, and in doing so increases the debts of the company can be made liable for the company debts. Who may be liable? Section 214 Insolvency Act 1986 has very wide scope, since it applies not only to de jure directors (that is directors who were formally appointed and their appointment was registered with Companies House. It can apply to de facto directors (that is people who assumed the role of director of a