This occurs where the directors of a company (or members of an LLP) have failed to take every step to minimise losses to creditors when they knew or ought to have known that there was no reasonable prospect of the company/LLP avoiding Insolvent Liquidation. The Liquidator can sue the directors (members of an LLP) for a contribution to the company/LLP’s assets that will form part of any Distribution to creditors.
Wrongful Trading is covered in detail by Section 214 of the Insolvency Act 1986.