BA Peters / Client Accounts

[petem]

There was recently a lenghty debate on here that concluded that Client Accounts had no legal status in the case of a company going Bankrupt. Howeverm the administrator for BA Peters mase some comments regarding the assets/liabilities of the Client Account (£650,000 of the expected £1,000,000 was present). Did this mean that the administrator did recognise that Client Account was not a regular asset?

Pete

 

[gjgm]

it depends quite where the client account is held. It should be held in trust, in which case it does not form part of the bankrupt company, but it would slightly depend on how well the client account was set up. But I guess if the client account is "short", it would have to claim against the now bankrupt company for its assets.
Incidentally, if the bank went bust, then the client account would become part of the bank's administration.

 

[MedDreamer]

I believe that even the Administrators were unsure about the status of this account and were going to ask the Courts for guidance.

 

[Observer]

[ QUOTE ]
There was recently a lenghty debate on here that concluded that Client Accounts had no legal status in the case of a company going Bankrupt. Howeverm the administrator for BA Peters mase some comments regarding the assets/liabilities of the Client Account (£650,000 of the expected £1,000,000 was present). Did this mean that the administrator did recognise that Client Account was not a regular asset?

Pete

[/ QUOTE ]

That's not what was stated by the administrator. AIUI, he said there was £650k in the client account but claims against the business totalled £1M. That may include trade creditors as well as payments made by boat purchasers. In the latter group, it's only brokerage buyers/sellers who are likely to have an interest in the client account. I would expect that money paid by a person purchasing from Peters as dealer/trader would (unless a special arrangement was made) 'belong' to Peters so would not have been paid into the client account. Peters may or may not have paid a corresponding amount to the builder. If they had not, the purchaser is simply an unsecured creditor of Peters (although possibly has some ownership rights in a (partly) completed boat, subject to other claims). If the money had been passed on, it's possible that the builder would honour the contract with the purchaser (effectively make a new contract) and recognise the amount received from Peters as a credit against the purchase price under that new contract. That's assuming the builder has no other claim against Peters - e.g. on other boats - (or is willing to waive it).

Without facts, we're speculating. Provided Peters did act properly wrt the client account (we have no reason to believe they didn't), I would expect that brokerage clients (purchasers and sellers) will not lose out. Purchasers of used stock boats may be OK provided Peters had not borrowed aginst them (quite possible that they did). The situation for those purchasers and for new boat purchasers (including new 'stock' boats) is at best uncertain, but, unhappily, doesn't look good.