(1) If in the course of the official winding up of a company it appears that any business of the company has been carried on with intent to defraud the creditors of the company or creditors of any other person or for any fraudulent purpose, the Court may, on the application of the liquidator or of any creditor, member or contributory of the company, if it thinks fit so to do, declare that the persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct.

(2) On the hearing of an application under the preceding subsection the liquidator may himself give evidence or call witnesses.

(3) Where the Court makes a declaration, it may give such other directions as it thinks proper for the purpose of giving effect to that declaration, and in particular may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any company or any person on his behalf, or any person claiming as an assignee from or through the person liable or any company or person acting on his behalf, and may from time to time make such further order as may be necessary for the purpose of enforcing any charge imposed under this subsection.

(4) For the purposes of this section, the expression "assignee" includes any person who or in whose favour, by the directions of the person liable, the debt, obligations, mortgage or charge was created, issued or transferred or the interest created but does not include an assignee, for valuable consideration not including consideration by way of marriage, given in good faith and without notice of any matters on the grounds of which the declaration is made.

(5) Whenever the business of a company is carried on at a time when to the knowledge of the directors of the company, the company had no reasonable prospect of paying its debts as they fall due any such business shall be deemed to have been carried on with intent to defraud the creditors of the company.