Help!!

Hi All

A customer of mine has gone into Voluntary Administration owing me (and lot of others) money. Before going in to admin they migrated all of their customers to a new company.

My questions are:-

What exactly is Voluntary Administration? Is what they've done legal? Am I ever going to see my money??

TIA.

Jason

What does 'migrate customers to another company' actually mean?

Do you mean providing support for whatever product or service they sold?

Probably not.

I would guess it means if the company is called xyz ltd starting another company called xyz 1 ltd or something a while before and start issuing all invoices with the new company name on etc in the hope no one realises then put xyz ltd into voluntary admin and continue trading as the new company with all the old customers.

Or as I discovered when I was bored at work and decided to do a search on businesses we dealt with to check the accounts ratings, one had changed its name from abc ltd to abc (uk) ltd and six days later the directors then set up a new company called abc ltd so on the surface without looking at the company number it is the same company but is actually a different legal entity - which all looked very suspicious if you ask me.

Chris

gone bust (more or less)

what you have described is legal. if you can show them to have been trading whilst insolvent (assuming they are a limited company) and that they knew they were insolvent, the directors could be personally liable for the loss to creditors.

in practise, you will not be able to prove this. and no-one else will bother trying to prove it either (liquidators, insolvency service, etc) - it is practically impossible to prove what someone did or didn't know, or even should have known. so forget it.

no

there is a slim chance that the administration rescues the business, but as a creditor you will usually be offered the option of a) getting 1% of the debt or b) nothing at all (liquidation where accountants take all cash - creditors get nothing).

by giving credit on an unsecured basis, you have taken a risk that has not paid off. it happens in business.

the reward is the profit you make on sales to them, the risk is you get burned.

sorry to sound negative but i have had plenty of experience of this. in the early days, frustration and rage were the emotions to accompany such insolvencies. nowadays, i am philosophical about it - you win some, you lose some. if you win much more than you lose you are doing well.

at the risk of sounding patronising, credit check your customers in detail in the future. if you are a member of the institute of directors, you can get detailed financial information on limited companies free (up to 125 reports per year). the membership may pay for itself.

Certainly when a local security firm went bust owing £300k to the IR & HMCE, the IR took the line that taking over a whole customer base was "Goodwill" that the new company should pay the old one for. However they would have been preferential creditors which would probably have made the difference as to whether it was worth persueing or not.

DG

Hmmm

Thanks for all the advice and benefits of your experiences. pretty much confirming what I feared. It's not what I wanted to hear but what can you do?

Thanks again.

Best Regards

Jason Power

No it's not. The directors appear to have transferred the goodwill at an undervalue, defrauding the creditors.

There have been developments!!!

The new company wouldn't consider investing in the old company unless it was in administration!!! SO that's why they put themselves into Admin!!!!! I know that this sounds like a bad joke but there's more. The new company looked at the books and said

"actually I think we'll pass"

They have been trading whilst in administration for the last week. Now I know that I can go after the directors personally for the money as they were obviously knowingly trading insolvently. but does anyone know what the route for this is? TIA