Which standard determines a director’s liability in wrongful trading?

The standard that determines a director's liability in wrongful trading revolves around the concept that a director "knew or ought to have known" that the company was unable to avoid insolvency. This places a responsibility on directors to be vigilant and aware of the financial state of the company. Essentially, it implies that directors must actively monitor the financial situation and recognize signs of impending failure. If a director fails to act when they should have become aware of such issues, they can be held personally liable for continuing to trade, thereby potentially increasing the company's debts to creditors.

This standard ensures that directors cannot simply maintain ignorance or detachment from the company’s operations; they are expected to engage with the company's financial health. By affirming this responsibility, the law aims to protect creditors and ensure more ethical business practices, encouraging directors to take timely action to mitigate potential losses rather than waiting until insolvency has arrived.

The other standards mentioned do not impose the same level of accountability. For instance, being "willfully ignored" suggests a clear intention to disregard the financial realities, while being "unaware" or having "no involvement" does not hold the director accountable for ensuring they are informed about the company’s fiscal issues. Therefore, the correct answer is based on the proactive