Company wound up - how's it work?

It's not legal.

There are laws to prevent this but unfortunately the people who get paid to prevent this happening care more about their salaries and less about their responsibilities.

I am in contact with the Official Receiver of a company in which the director took cash and other assets from the company and refused to provide the accounting records or attend meetings. A warrant was issued for his arrest but despite me providing information about where he worked no action was taken. It would appear that the Official Receiver did as little work as possible and was incompetent. I am not going to let it rest.

The company has to go into administration.

The administrators then let the directors buy the assets at a knock down price to continue trading "as a going concern" with the new company.

But it is still incumbent on the administrator to get a "fair" price for the assets which will be distributed to the creditors.

How the process of registering your claim works when you didn't know that the company went into administration, I don't know

tim

And if the company didn't go into administration? He just set up a new company and moved the assets of the old company to the new site.

"tim...." wrote

The administrator's #1 job is to get his fee paid. He's not a charity.

So he will generally try to do a private deal with the former directors for a "low friction" job, which may or may not be good for the creditors... but in 99% of company failures (in my 32 years' experience, more like 100%) the unsecured creditors get nothing anyway, after debenture holders get their slice, so while it may be illegal in some way, the eventual outcome is just the same.

It stinks, but nothing can be done about it short of making limited companies illegal, which would stop private enterprise in its tracks.

As always, the way to do a runner in business and get away with it is to not piss off any one party too much, and ALWAYS pay off HMRC debts. So, set up your business in say Scotland and make sure all your suppliers are in SE England and you don't owe any of them more than a few k. Nobody is going to send somebody to Scotland to bang on your doors - after BT have cut your phone off so obviously there won't be anybody there.

that would be illegal (or ineffective)

tim

No, her has a responsibility to get the best deal for the creditors.

If he acts in a ways that isn't a reasonable attempt to do so he can be sued.

tim

In article , Postman Pat writes

Let me guess, is it common for the price agreed for the sale of assets to the new company to be just enough to cover the fees of the administrator?

Well, I have proof that he was trading as the old company at the new site at least until Christmas. Then all that changed was the name on the boards. What can I do about it though?

you got it in 1...

watch Pompy Footy club for an in depth experience.

Company names are irrelevant to who owns a debt.

It is then ownership of the company that is relevant.

You need to find out how the ownership has changed (or not).

And it's also relevant whether the company is incorporated or not.

tim

It happens, but I don't think it's common

tim

Limited company?

Same director as the old one

Not

Unfortunately in this case there was no administrator.

Just out of interest what was the product the company marketed.

OK

My mistake. I should have referred to the registration of the company. Do the two names belong to the same registered company or are they different?

If they aren't the same you need to establish how the assets of one company were transferred to the other. If any material assets were transferred for no consideration then a fraud was probably be committed.

If OTOH there were no tangible assets apart from their business model or customer list, you might be a bit stuck

tim

Different registrations on CH, but he has been trading as the old company at the new site up until Christmas.

Probably got a van and just moved it all over. No difference in paying himself really.

Smal business doing IT training. About three dozen computers, several large printers, couple of servers, desks, giant fishtank. However he charges circa

IT Training courses - then you pay for your exam and get professionally certified by Microsoft, Cisco, etc.

I was more referring to the "cash" assets. A few computers is not going to be large on a balance sheet.

As do most, but that is irrelevant.

He can quite legally close his old company, leaving all debts behind and take his "professional" reputation to new company in the same business and keep all the new profit himself.

It's the book assets he can't move without paying for.

tim

Well, I wasn't the accountant, I just answered the phones. Nevertheless, the amount is significant and maybe it's just coincidence that he shut up shop and started again a month after the tribunal judgement, but I don't believe in those.