Liquidation scam?

I was a director of a company which I resigned from because the rest of the directors were driving the company rapidly into insolvency - I put it down to incompetence but....

After I resigned the company went into liquidation (suprise suprise) owing me and a lot of other people lots of money. All was lost including my shares (one director/investor took all the assets as he had a debenture). I since discovered that an agreement to sell the companies assets to another company had been signed a few weeks BEFORE the liquidation and the other directors re-employed by the new company to carry on the business in another name.

Is that legal? Have I been stitched up? Know any good (cheap) lawyers?

Reply to
James
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Not an expert, but I think you would need to demonstrate that the other directors had acted illegally or unfairly in their conduct.

There is case law (Foss v Harbottle) that basically says a minority shareholder is bound by the majority because it is the company that is the proper plantiff, ie it is the company that should sue for the damage where the directors have acted inappropriately. Obviously in this case the company has been liquidated,. and so can't take action to protect its assets.

However, Section 459 (Companies Act) can afford protection to minority shareholders, basically you need to show that your investment has been seriously damaged by "unfair" practice. I am not sure how this applies to an already liquidated company, but you might be able to show that your rights as a minority shareholder were breached.

Some basic info is at this link:

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That said, if the directors have acted properly then there is little room for you to fight on. In essence creditors are always paid before shareholders on a liquidation, and so despite the asset sale, if the assets did not cover the debts (including debentures which are just loans) then it would be hard for you get any money out.

If you were going to fight this, you would need to get a specialist in company law. I doubt they will be cheap, but I guess it depends on the size of the company, certainly at the big PLC end rates are very high, but there must be people who also do work for smaller companies and therefore have appropriate rates.

After I resigned the company went into liquidation (suprise suprise) owing me and a lot of other people lots of money. All was lost including my shares (one director/investor took all the assets as he had a debenture). I since discovered that an agreement to sell the companies assets to another company had been signed a few weeks BEFORE the liquidation and the other directors re-employed by the new company to carry on the business in another name.

Is that legal? Have I been stitched up? Know any good (cheap) lawyers?

Reply to
S Shortem

No (probably), yes (probably) and no.

(uk.legal added)

Reply to
Rhoy the Bhoy

Would it be worth talking to the DTi? I suspect the test of legality is whether the assets were sold at a fair market price.

IANAL

Stephen

Reply to
Steve Maudsley

That's one half of the equation. The other half is what they did with the proceeds of sale of the assets.

Reply to
Johnjo

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