R v Grantham, 1984 QB 675, Court of Appeal
Citation:R v Grantham, 1984 QB 675, Court of Appeal
Rule of thumb:When can a person be prosecuted for fraudulent trading? When they get more loans from new creditors which they have zero chance of paying back, as they are already technically and objectively insolvent & unable to pay their current debts to creditors.
Judgment:
‘The Judge eventually decided in favour of the trader on the basis that, although he might have been guilty of insufficient care and supervision of his business, he could not be said in the words of Maugham J, to have been guilty of real moral blame so as to justify the Judge in saying that he ought to be liable for the debt of the company without limit. In other words, he acquitted the trader of dishonesty – an essential ingredient to liability. In so far as Buckley J was saying that it is never dishonest or fraudulent for directors to incur credit at a time when, to their knowledge, the company is not able to meet all its liabilities as they fall due, we would respectfully disagree...'
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.