For a company director to allow a company to continue to trade while it is insolvent is a breach of duty under section 135 or 136 of the Companies Act.  It is the duty of a Liquidator to report on any such reckless trading that is uncovered in the course of his or her efforts on behalf of creditors to recover any debts owed once the company is put into liquidation. The identification of reckless trading does give rise to possible civil action from creditors against the directors: creditors who may choose to seek reimbursement from the company for any shortfall in debts owed them. Consider a company that purchases a property for $1.9 million dollars, borrowing all the money to pay the purchase price. A director who finds that the company is unable to meet interest repayments on a first and second mortgage, should realise that a mortgagee sale is inevitable unless he can refinance the loan, source capital from elsewhere or gain assistance from a kindly tooth fairy. If however, the director allows debts to mount up for months due to unpaid interest and persists in carrying out trading operations throughout the period of insolvency, that would constitute reckless trading by the company, for which he is directly responsible. All income gained by the company over the period of insolvency would be subject to a rightful compensation claim be creditors via a civil action in the Court. If the company director failed to produce a credible record of company income deposited in a company bank account over this period, he would have committed an offence under the Companies Act 1993. Directors who fail to file an annual return after an extended period of such reckless trading, should be banned from being company directors. A director who through mismanagement allows two of more of his companies to be put into liquidation is more than likely to be banned as a director by the Ministry of Economic Development under s. 385 of the Companies Act 1993.