Business debts not known about

CKhalvashi

Sorry to annoy you guys, I'm just on a search for a bit of common sense advice here!

I bought my business partner out in April and things were running smoothly until I've received a letter in the office today.

It appears that in my former bp's time with the company (from incorporation in 2005) that debts have been racked up using another bank, who are not willing to speak to me as I have no access to the accounts, even though I am the sole director and my partner is the company secretary. The statements are showing around £140k on overdraft and £18000-odd on a loan that has not been paid since April, both secured against my business property, which is becoming a nightmare, as I really don't want to lose that!

It's not that I don't have the money to pay this, it's the fact that the bank are trying to make my life as difficult as possible, even though the accounts have run through HSBC from day one, which is where I bank personally also! I just can't bear thinking about being forced into liquidation through something I genuinely didn't know about, especially when he's already had 7 figures! :mad:

If anyone can offer advice on what to do next, it would be most appreciated!

C

pelirocco

How could you not know that your business ( when you were a partner) was using a different bank account ?

dancingfairy

Hmm sounds dodgy - what form of company do you have?
Have you tried Business Debtline for help and advice on this?
Have you got a local business link or someone at the council who can point you in the direction of help and advice?
What documents did you see when you bought the company - were there annual accounts signed off by an accountant for example, was there a solicitor involved on your side as they may be able to help on your next move?
Do you know in what capacity the loans were taken out - I can't see if they were taken out in the name of the business how the bank can then reposses on them if they won't deal with you who've bought the business.
Sorry I can't be of more use as I don't know anything but hopefully one of the above wil sort you out - I'd try the free sources of help first but in the end it may be worth paying a solicitor to get to the bottom of it all for you.
Best of Luck
df

CKhalvashi

Sorry, didn't notice the replies until I logged in 2 seconds ago, thanks for the help!

As much as most feel I'm mental, we own a record label specialising in the younger end of the market.

We're now PLC (although not registered on any stock exchange anywhere) however were Ltd, however the amount of post still coming through in Ltd, I opened it. These were accounts that required one signature, however seemingly outright lies on the application form, however I can't prove this. No-one would have given a reasonably new company that amount of credit, especially if they knew the Senior Partner (50% + 2 shares) didn't know about it?! This has never shown on the books, I have double checked that one alongside CH records.

Problem being dealt with by solicitor at the moment, so fingers crossed and I'll keep anyone updated if so required, please PM me. It just seems that someone had a lack of self-control in handling any form of money! :mad:

pelirocco

In your first post you said you were incorporated in 2005 , so hardly a new company?

So where does Santander come into all of this? ( see other posts )

SJ1

Did you do a due diligence when you bought the company? Surely this extent of debt should have been revealed then. If it wasn't revealed deliberately then I imagine that you would have some sort of case against the person that you bought out (but this kind of case is extremely tricky). Further did you get any assurances from him when you purchased the business = usually the contract of sale states the terms that you purchased the business under, the accounts etc and you would have a case for breach. Did you get a firm of accountant/solicitors to comment on the buyout from a valuation perspective?

SJ

CKhalvashi

pelirocco wrote: »

So where does Santander come into all of this?

Santander's a completely different issue as far as this goes. Same business, but something I (rather stupidly) ran through my personal accounts.

That is going down the criminal route (The other in question and also one of their own staff) following a conversation with a police officer the other week.

CKhalvashi

SJ1 wrote: »

Did you do a due diligence when you bought the company? Surely this extent of debt should have been revealed then. If it wasn't revealed deliberately then I imagine that you would have some sort of case against the person that you bought out (but this kind of case is extremely tricky). Further did you get any assurances from him when you purchased the business = usually the contract of sale states the terms that you purchased the business under, the accounts etc and you would have a case for breach. Did you get a firm of accountant/solicitors to comment on the buyout from a valuation perspective?

SJ

Hey SJ, sorry for not replying sooner, been on nights for the last 4 (!)

I paid £1,000,000 on a business worth just under £800,000, as the foundations were there and I could do a lot more (and am happy to do a lot more) with the company as owner, rather than just a Division Manager, that's my annoyance with this.

Something that may have got me off the hook as far as this goes is the fact we're now PLC, rather than Ltd (The Ltd was kept open under his name for royalty purposes rather than anything else), meaning that technically, as it stands, I owe nothing. This was one of the conditions of me buying the company. As far as this goes, I think the Ltd had about £4000 put through it in April, then was liquidated itself (Expat = no tax etc etc etc).

I'm waiting for the solicitor to get back to me as we speak, but knowing that I've had to quite rapidly change my lifestyle, as well as borrowing money from family to get my hands on this, I'm not willing to let it go now. When I hear more, I'll re-post

Chris

DebtFree2015_3

Will be interesting to find out what the other bank make of not registering a charging order with CH. Usually these contracts need to be ratified by a board of directors. Agree with the comment about offering lines of credit, this level of debt is usually followed by close level of reporting to the bank and then a request for an audit. On top of the (floating?) charge that should have been registered as mentioned. For the record, it is very difficult to check what bank accounts a business has, not as "easy" as with an individual, no amount of DD would have picked this up. If you are subject to annual audit, directors are asked to make representations (statements of truth in effect) to the auditors that (amoung other things) you have disclosed all bank accounts to the auditors, the auditors as part of the process will have written to all banks envolved - only problem is if the account is not disclosed, then not going to find out! Can't offer much avice except speaking to a good accountant and solicitor which you already seem to be doing, sounds lie the criminal route is the best option for you - or any clauses in the conract of sale. Sorry this has happened, I've seen the potential in a flawed system for a long time. Hope it goes well and hang in there.

CKhalvashi

Thanks for the support guys. My wife seems to have come up with a clever plan, of which ****** Media PLC can't be held responsible for the debts of ****** Music Ltd, however this is something I've been told is not the case. I have blanked the full name out knowing that some of you have worked out what I do, and even my mobile phone number (!) from previous posts. Please noone else pm me to tell me this!

The only good news to come out of this is the fact I've got a lovely mother who's paid the (already steep) legal bill and there's a good chance of catching him (address, phone numbers etc etc etc).

I'm back off on holiday tonight, and as I know some of you are interested, I will be posting what I know when I know it.

All the best

CK