In February 2016, Mr Justice Snowden handed down his judgment in the High Court proceedings concerning Ralls Builders Limited (in liquidation) [2016] EWHC 243 (Ch). This matter concerned an application by the liquidators of Ralls Builders Limited (in liquidation) (the company) for a declaration regarding the alleged wrongful trading of the company by its directors, under section 214 of the Insolvency Act 1986 (the Act).
The detailed and considered judgment sets out the historical case law regarding wrongful trading, and addresses some of the uncertainty in this area.
Mr Justice Snowden considered, as is usual, the dates from which it was alleged that the directors knew, or ought to have known, that there was no reasonable prospect of avoiding an insolvent liquidation (the usual threshold for a finding of wrongful trading). The directors were found to have been in a position whereby they knew (or ought to have known) by 31 August 2010 that there was no such reasonable prospect. The company went into administration on 13 October 2010, and was since placed into liquidation.
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