Wrongful trading is a type of civil wrong found in UK insolvency law, under Section 214 Insolvency Act 1986. It was introduced to enable contributions to be obtained for the benefit of creditors from those responsible for mismanagement of the insolvent company. Under Australian insolvency law the equivalent concept is called "insolvent trading".

The principle of wrongful trading was introduced in the Insolvency Act 1986, to complement the concept of fraudulent trading. Unlike fraudulent trading, wrongful trading needs no finding of 'intent to defraud' (which requires a heavy burden of proof). Wrongful trading is therefore a less serious, and more common offence than fraudulent trading.

Under UK insolvency law, wrongful trading occurs when the directors of a company have continued to trade a company past the point when they:

Wrongful trading is an action that can be brought only by a company's liquidator, once it has gone into insolvent liquidation. (This may be either a voluntary liquidation - known as Creditors Voluntary Liquidation, or compulsory liquidation). It is not available to the directors of a company while it continues in existence, or to other insolvency office-holders such as an administrator.

A limited company becomes insolvent when it can no longer pay its bills when due, or when its liabilities, including contingent liabilities such as redundancy payments, outweigh the company's assets. This is a critical point in the lifespan of a company as it denotes when the directors responsibilities change from protecting the interests of the shareholders to protecting those of the creditors. It also means that the directors need to be extremely careful when considering whether to continue to trade, or not. Any director who knows that the company is insolvent and makes the decision to continue to trade, and in doing so increases the debts of the company can be made liable for the company debts.

Section 214 Insolvency Act 1986 has very wide scope, since it applies not only to de jure directors (that is directors who were formally appointed and their appointment was registered with Companies House. It can apply to de facto directors (that is people who assumed the role of director of a company without being appointed), or shadow directors (that is people in accordance with whose direction the de jure directors were accustomed to act.

Initially, there was uncertainty among banks and insolvency and restructuring professionals who assisted and advised companies facing insolvency that they may be caught by the wrongful trading provisions. This has not proved to be the case (as of July 2006), and professionals are unlikely to be covered by these provisions except in exceptional circumstances.

In order to establish liability, the liquidator needs to demonstrate, using the civil burden of proof (i.e. on the balance of probabilities) that the directors continued trading the company beyond a point in time when they knew, or ought to have ascertained, that insolvent liquidation was inevitable.