Liquidated company

[volvopaul]

Here is one for you legal people on here.

A company faced with a client claiming damages for work done which was faulty and a poor standard resulting in his engine being a complete write off after they had rebuilt it.
Instead of them defending themselves in court against there client they file for liquidation prior to the court case being heard therefore the case does not exist as the liquidated company has no assets to pay there client.
They have been trading for years prior to this and are still trading but obviously under another name at the same premises.

Question is , is this legal or is it just another way of getting out of paying? The usual happens, directors resign etc.

 

[jrudge]

The challenge is that the law is an ass.

There are various things that are illegal ( trading whilst insolvent being one). Lets just say for argument this was illegal( which it may not be)

The challenge then is that someone must fund the legal action to investigate the directors and pursue them for wrongful trading or whatever. The outcome is very less than certain as (a) you prove wrongful trading ( difficult as I understand) and then you have to try and get the Directors to pay.

This then comes down to good money after bad, so unless the wrongful trading is so so blatant AND the amount enough AND you know the person can pay - and will not just divert assets ( yes illegal ... but you have to prove it ... costs more money ..) then most people just walk away.

Illegal? Who knows? The Directors will just say it had nothing to do with the court case, they were just insolvent. Indeed that maybe true ....

 

[Vitesse]

You could do worse than ask your question here:

http://swarblaw.co.uk/

As phrased above, it should meet with the forum rules.

 

[oldgit]

Club member had engine rebuilt by local marine engineering company in Cuxton.
Engine had further problems due to original fault not being found and sorted.
Spent more money with same company.
Engine finally totally stops and repairer refuses to fix or refund.
Several years go by as claim goes through the motions and fees mount up.
Claim is just about to go into court when repairer goes bankrupt under original company name but continues to trade under different company name.
Club member now has knackered boat engine and a solictors bill to pay, his boat has been unusable for 5 years.

 

[bedouin]

Almost certainly not a lot you can do.

The whole point of a Limited company is that it is very difficult to pursue individuals for company debts. The sort of thing described happens all the time and the authorities are very reluctant to do anything about it.

It would be worth contacting Trading standards - they may do something if they have enough complaints but the chance of the claimant in the OP seeing anything is vanishing small.

Of course if any of the payment were made on Credit Card then there is an alternative route

 

[Cardo]

It's in situations like theses that I'm amazed the premises of the scumbag companies don't go up in flames.

 

[No Regrets]

I'm with Cardo.

One would have to make sure of CCTV etc.....

 

[peterandjeanette]

If the trading company went into voluntary liquidation then surely there will be assets available for a creditor to sue the company and claim their value.

If the trading company transferred assets to a holding company then the trading company can be wound up and a new company formed using the assets of the holding company. The original trading company has no assets and therefore cannot pay out to creditors.

I'm not sure if there is a time limit for the setting up and transfer of assets to the holding company before the trading company can be wound up.

If I'm talking a load of b@@llocks please feel free to shoot me down. I'm not a legal wizard.

 

[volvopaul]

If the trading company went into voluntary liquidation then surely there will be assets available for a creditor to sue the company and claim their value.

If the trading company transferred assets to a holding company then the trading company can be wound up and a new company formed using the assets of the holding company. The original trading company has no assets and therefore cannot pay out to creditors.

I'm not sure if there is a time limit for the setting up and transfer of assets to the holding company before the trading company can be wound up.

If I'm talking a load of b@@llocks please feel free to shoot me down. I'm not a legal wizard.

The failed company has been trading for years before they did the work and after, this started 7 years ago and has taken this long to get a result. I expect the company still traded but the profit was fed into the sister company so there were no assets at the bank when they filed for bankruptcy , the sister company must have assets to cover the claim.the claim was nearly 10 times the amount the client paid for the work but his engine is trashed by them so it all escalated into a re engine situation. The whole case dragged on for years and a court date was set, a few days prior to this they filed which ended the case as there was in theory no company to sue .

 

[peterandjeanette]

Unfortunately, AFAIK, the "sister" or "parent" company cannot be held responsible for the faults of the trading company.

Thus the client has no claim against the parent company and the trading company can be liquidated.

 

[rustybarge]

Unfortunately, AFAIK, the "sister" or "parent" company cannot be held responsible for the faults of the trading company.

Thus the client has no claim against the parent company and the trading company can be liquidated.

.....a bit like Southerly boats?

 

[Seastoke]

buy a banger and ram it in is car then kick is head in

 

[rbcoomer]

I would hazard a guess that if it could be proven that the liquidation was done as a means to evade a claim and the ownership was/is the same then there is a case for a charge of fraud against the individuals. Probably quite difficult (and costly) to prove and perhaps not worthwhile? On the basis however that they would hopefully have been covered by some form of professional indemnity, it seems to me unlikely that they'd go to such lengths to avoid a settlement for a one off incident. That in turn would lead me to think that there are likely to be other claimants/incidents and a 'name and shame' approach (with care to state facts only and not make accusations) might improve prospects of success. In order to ensure your not wasting your time however it would be necessary to (legally) establish the assets of the individuals concerned - otherwise it'll be throwing good money after bad! I'm not a legal expert, but I've worked in the insolvency industry and not all methods used are shall we say 'ethical' and like most accountants they'll represent their own interests and those of their client first - in this case whoever was the biggest creditor or perhaps even the directors?

 

[Resolution]

Sorry to say it but an awful lot absolute tosh has been spouted so far. Unless you KNOW what is involved in the legal process of liquidation you really should save your breath. Even then outsiders are unlikely to know the trading details of the limited company concerned, or the reasons for the actions described.

Of course if you just want a lynch party, go and get your white robes and conical hats out and go for it.

PS Volvopaul: I have no knowledge of, or connection with, the company you are describing.

 

[Deleted User YDKXO]

I would hazard a guess that if it could be proven that the liquidation was done as a means to evade a claim and the ownership was/is the same then there is a case for a charge of fraud against the individuals.

I agree. If the directors knowingly put the company into liquidation because of an impending claim, then theoretically they might have been trading wrongfully or insolvently before that although I don't know that there is a case for fraud, more a criminal offence under the Insolvency Act. However I guess the directors will be able to claim that it took them some time to establish that the claim against their company was legitimate and therefore they had a right to continue trading until they had established the legitimacy of the claim. However I also guess that deliberate actions to move assets out of the company during this period would indicate that they knew the claim was legitimate. In theory directors may be personally liable for debts incurred during wrongful trading so in this case, its got to be worth a phone call to a lawyor specialising in insolvency to discuss the situation

 

[longjohnsilver]

Sorry to say it but an awful lot absolute tosh has been spouted so far. Unless you KNOW what is involved in the legal process of liquidation you really should save your breath. Even then outsiders are unlikely to know the trading details of the limited company concerned, or the reasons for the actions described.

Of course if you just want a lynch party, go and get your white robes and conical hats out and go for it.

PS Volvopaul: I have no knowledge of, or connection with, the company you are describing.

You imply that you KNOW what the legal position is, so rather than knocking other posters, why not educate us and spell out what's what.

 

[sarabande]

VP

do you by chance know if the company had any kind of professional indemnity insurance before they went down ?

 

[volvopaul]

Please read my post , I have not mentioned any particular company here at all, I'm just after an answer to a scenario for now.

Perhaps you would like to input something to this as there must be many posters on here that would benefit your wisdom and knowledge of the liquidation industry.

 

[Neil_Y]

It's a messy difficult business, but when you see what Dickies did last year, the phoenix company approach when faced with failure seems to be legal and available as an option. The owners and directors face little in terms of loss whilst others loose their shirts, in my case 25 good shirts worth.

What's really annoying is when you pay to send the bailiffs in (not Dickies but computer clearances), that costs you more money and then you find they've moved premises or changed name so you loose that as well!

 

[Jurgen]

Some people in business are just Scum Bags, they know how to play the system and usually have a couple of companies in the back ground that they can transfer assets into prior to going bump.

I'm all for a visit in the middle of the night, you wont get your dosh back but the scum bags will get one hell of a pasting.