UK: England and Wales: wrongful trading and risk taking in the film industry

Judgment was given in Singla v Hedman [2010] EWHC 902 (Ch) at the end of last month. The trial judge found the sole director of a company guilty of wrongful trading under Section 214 of the Insolvency Act (1986), where the director caused the company to enter into an agreement for producing a film where the company had insufficient funds to meet its obligations under the agreement.

One interesting aspect of the case was the director's suggestion (in a witness statement) that his actions were not unusual and that because film-making was risky it was inevitable that creditors would be owed money when film companies failed. This received short shrift from the trial judge, who observed that the director's statement suggested "a remarkably low standard of corporate responsibility in the film industry as being normal. There is however in my view no special low standard for people in the film industry" (para. [105]).