Business insolvency question

Strapped

I know of a company which recently became declared insolvent and I believe is going into liquidation. However, one of the directors has set up another ltd company, trading from his home address, carrying on the same business as the now-insolvent company. Is this perfectly legal?

mizzbiz

It is perfectly legal unless the director in question is disqualified or bankrupt.

It is even possible to start pretty much the same company up again, with the same director. This is known as a phoenix company.

cavework

Yep , all those unsecured creditors get nothing and the man at the top just starts up again.
The Phoenix rising from the ashes of those poor creditors they can legally walk away from and not pay a penny owed.
I hope the new suppliers do a credit check on him and his 'new' company!

easyhost

Strapped wrote: »

I know of a company which recently became declared insolvent and I believe is going into liquidation. However, one of the directors has set up another ltd company, trading from his home address, carrying on the same business as the now-insolvent company. Is this perfectly legal?

yes the can remember the officers club the other year when that went into liquidation. the MD of the liquidated officers club purchased from the administrators the most profitable stores, all stock, staff and business name and just continued trading from these stores as if nothing happened.

this happens all the time with management buyouts (i think is wrong) as you think its the same management that placed the company in trouble in the first place.