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ARTICLE · 03 JUNE 2020

Wrongful Trading: An Update

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The Law Society of Jersey has this week issued guidance commenting on the rules governing wrongful trading under Jersey law given the financial difficulties caused by the COVID-19 pandemic.

JerseyCorporate/Commercial Law
Andrew Weaver
Andrew Weaver
Gemma Whale
Gemma Whale
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The practice statement issued this week seeks to clarify the circumstances in which a wrongful trading claim may be brought against directors under Jersey law and emphasises certain matters by way of reassurance to directors, such as:

  • a wrongful trading claim can only be brought against a director if the company enters a formal insolvency process; and
  • for a claim to be successful, a director must know (or be reckless on the facts known to him or her) that the company no longer has a reasonable prospect of survival and there may be a wide spectrum of legitimate views as to what constitutes a "reasonable prospect". It may be that the Viscount or liquidator may only wish to pursue a clear claim, as there will be a significant evidential burden for them to overcome.

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