ExpertACCA · Question 58 · Corporate and Business Law
SCENARIO: Titanium Structures plc is a construction firm. In January, the directors realized the company was hopelessly insolvent due to a supply chain crisis and could not avoid liquidation. However, hoping for a 'miracle contract', they continued trading, ordering £500,000 of steel on credit in February. They had no intention of defrauding the supplier, they were just overly optimistic. In March, the company collapsed into insolvent liquidation.
Based on the directors' actions, which provision of the Insolvency Act 1986 are they most likely to have breached?
SCENARIO: Titanium Structures plc is a construction firm. In January, the directors realized the company was hopelessly insolvent due to a supply chain crisis and could not avoid liquidation. However, hoping for a 'miracle contract', they continued trading, ordering £500,000 of steel on credit in February. They had no intention of defrauding the supplier, they were just overly optimistic. In March, the company collapsed into insolvent liquidation.
Based on the directors' actions, which provision of the Insolvency Act 1986 are they most likely to have breached?
Answer options:
Fraudulent trading (s.213)
Wrongful trading (s.214)
Misfeasance (s.212)
Transactions at an undervalue (s.238)
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