imi Posted March 28, 2009 Share Posted March 28, 2009 I was watching in horror an episode of Homes from Hell a few days ago and couldn't believe how customers were left to cough up the cost of repairs themselves as builders were going into liquidation and then trading under a different name in a matter of hours washing all responsibility to their errors... Today to my horror this morning I wake up and see something similar happen to one of our traders. With the credit crunch, I can see this being an easy way for companies to cop out of all responsibility and starting with a clean slate (apparently). My understanding of this is quite poor so I would like to discuss: - How does the law stop the above situation from being abused? - In a situation where a company goes into liquidation, and say the directors declare themselves bankrupt too - what happens next, do the directors go to jail, what action is taken against them if they cant pay out? - How does the law really protect the customer? Many thanks imi Quote Link to comment Share on other sites More sharing options...
far Posted March 28, 2009 Share Posted March 28, 2009 I have had to deal with a couple of customers who have gone into liquidation, I would firstly find out if the company is actually going into liquidation or is the company just closing. If its being liquidated then the firm should be able to give you the details of the liquidators If its a LTD company then the liability is not with the director (ie their assetts cannot be ceased etc) as the company is classed as an entity itself. Your should read here http://www.companieshouse.gov.uk/infoAndGuide/faq/liquidationInsolve.shtml Quote Link to comment Share on other sites More sharing options...
Wez Posted March 28, 2009 Share Posted March 28, 2009 This is exactly the reason you have a Ltd company, if it goes t1ts up then you are protected as an ex director etc With a none Ltd company the responsibility lies with the owner, so you would lose your house etc to pay back any outstanding debts. Quote Link to comment Share on other sites More sharing options...
extendor Posted March 28, 2009 Share Posted March 28, 2009 I have had to deal with a couple of customers who have gone into liquidation, I would firstly find out if the company is actually going into liquidation or is the company just closing. If its being liquidated then the firm should be able to give you the details of the liquidators If its a LTD company then the liability is not with the director (ie their assetts cannot be ceased etc) as the company is classed as an entity itself. Your should read here http://www.companieshouse.gov.uk/infoAndGuide/faq/liquidationInsolve.shtml Not entirely true. If a Director can be argued to have acted negligently or in certain knowledge that the actions of the Company were illegal then the Director can be held responsible as an Officer of the Company and pursued personally. Ceasing trading offers more protection to the Directors than liquidation. Ceasing Trading is a limbo and most people get bored and go away. Liquidation forces resolution but it depends how high up the creditors list you are after HMRC, bank, staff etc. Quote Link to comment Share on other sites More sharing options...
Pete Posted March 28, 2009 Share Posted March 28, 2009 It happens. There's not much you can do about it other than get in there quick and grab anything you can of worth. It's especially grating when you sell a company that KNOWS it's going under a load of gear just the week before and they have no intention of paying for it. There are several unsavoury individuals that do this on purpose and just go on registering new companies in family member names to rip off a whole load of other unsuspecting people. As a consumer, if in doubt - use a credit card. Quote Link to comment Share on other sites More sharing options...
far Posted March 28, 2009 Share Posted March 28, 2009 Not entirely true. If a Director can be argued to have acted negligently or in certain knowledge that the actions of the Company were illegal then the Director can be held responsible as an Officer of the Company and pursued personally. QUOTE] I'm pretty sure that has to do with a director acting illegally or fraudulantly, it would be a tenious link and hard to prove in order to prosecute a director and hold them responsible/cease their assetts in a case of liquidation for reasons of ill practice/poor upkeep Quote Link to comment Share on other sites More sharing options...
Pete Posted March 28, 2009 Share Posted March 28, 2009 You'd of course needs a bum load of money and time to proceed in this manner. Quote Link to comment Share on other sites More sharing options...
Todd Posted March 28, 2009 Share Posted March 28, 2009 There are several unsavoury individuals that do this on purpose and just go on registering new companies in family member names to rip off a whole load of other unsuspecting people. Seems to be a case of this happening every week on Watchdog, seems incredible the law allows this. Quote Link to comment Share on other sites More sharing options...
AndrewOW Posted March 28, 2009 Share Posted March 28, 2009 Seems to be a case of this happening every week on Watchdog, seems incredible the law allows this. Its dog eat dog in this financially insecure world we live in now, unfortunately. Quote Link to comment Share on other sites More sharing options...
dwayne Posted March 28, 2009 Share Posted March 28, 2009 its just happened to a friend of mine this week and as i work for him it looks like i might be out of a job to help recover the 10k+ that he will never see from his ltd company customer. its a terrible domino effect and it always seems to end up with the average guy suffering the most dodgy times indeed Quote Link to comment Share on other sites More sharing options...
imi Posted March 28, 2009 Author Share Posted March 28, 2009 Its dog eat dog in this financially insecure world we live in now, unfortunately. I see it a different way, desperate times like this shows off the true colours in people. Quote Link to comment Share on other sites More sharing options...
Todd Posted March 28, 2009 Share Posted March 28, 2009 that is an excuse. Yes but it's also a reality Quote Link to comment Share on other sites More sharing options...
extendor Posted March 28, 2009 Share Posted March 28, 2009 Not entirely true. If a Director can be argued to have acted negligently or in certain knowledge that the actions of the Company were illegal then the Director can be held responsible as an Officer of the Company and pursued personally. QUOTE] I'm pretty sure that has to do with a director acting illegally or fraudulantly, it would be a tenious link and hard to prove in order to prosecute a director and hold them responsible/cease their assetts in a case of liquidation for reasons of ill practice/poor upkeep I think you can also be done for preferential treatment of creditors. For example you should not sell stock to pay some creditors rather than others. This helps http://www.businessrecoveryadvice.co.uk/html/responsibility/intro.asp#againstdirectors Quote Link to comment Share on other sites More sharing options...
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