What does “trading while insolvent” actually mean in real life?

This term scares a lot of directors, but it’s often misunderstood. 

It usually refers to: 

• Continuing to trade 
• When liabilities clearly outweigh assets 
• With no realistic prospect of recovery 
• And creditors being made worse off 

It’s not about honest attempts to survive. Context matters. 

Were you ever warned where that legal line actually sits?