Question 2 - Part a (i)

In this lesson

1. 0:00 Question 2A1: Wrongful and fraudulent trading
2. 0:27 Mark allocation and structure strategy
3. 1:23 Exhibit one: Company background and financial position
4. 3:24 Key indicators of financial distress
5. 5:01 Aaron's cash extraction and loan application
6. 7:33 Fraudulent trading: Definition and liability
7. 9:26 Wrongful trading: Definition and liability
8. 11:23 Applying wrongful trading to Aaron's situation
9. 13:36 Evaluating fraudulent trading charges
10. 15:27 Alternative scenario and professional judgment
11. 17:32 Mark scheme analysis and conclusion

About this lesson

The video demonstrates how to allocate marks strategically between theory (describing the legal definitions) and application (evaluating the director's liability), showing why the applied element typically carries at least half the available marks. You'll see how to extract relevant facts from a case scenario—such as mounting losses, inability to pay creditors, net liabilities, and deliberate non-disclosure to lenders—and connect them to the legal definitions of fraudulent and wrongful trading. The key distinction explored is intent: fraudulent trading (a criminal offence requiring intentional deception of creditors) versus wrongful trading (a civil matter where a director continues trading whilst insolvent without taking reasonable steps to avoid liquidation). The walkthrough shows how to structure your answer with clear subheadings, build your argument progressively, and use balanced evaluation to demonstrate professional judgement. You'll see how acknowledging alternative interpretations—such as whether the director's actions constitute criminal fraud or merely civil wrongdoing—strengthens your response and earns professional marks. This approach is typical of UK variant case study questions where applying knowledge to specific facts is as important as knowing the law itself.

Duration: 20m