Administrators to inquire into insolvent trading at Woolworths
At the creditors' meeting of Woolworths, held on 3 February, the administrators were asked to inquire into whether directors of the company continued to trade whilst it was insolvent, the Times has reported. Woolworths entered into administration on 21 November last year.
Neville Khan, one of the joint administrators, was quoted as saying, "Creditors could see it was making a loss and some asked why wasn't it stopped earlier."
Included in their report to the Department of Business, Enterprise and Regulatory Reform, Administrators are obliged to report on whether a company was trading insolvently. Directors can be made personally liable for a company's debts if they are found to have been wrongfully or fraudulently trading whilst it was insolvent.
A source close to the former Woolworths' board said, "You can rest assured that the directors took their responsibilities incredibly seriously and were aware of all their legal duties. They did all they could to protect investors and stakeholders and took legal advice throughout."
Partner and Head of Corporate Recovery and Insolvency at JMW Solicitors, Richard Wolff, commented, "It is imperative that directors of an insolvent company take appropriate professional advice to ensure that they are acting in the best interests of creditors and do not find themselves at risk of a wrongful trading claim."
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#1 options trading @ Mar 30, 2011