Closing LTD company

Brassedoff

toddle2u wrote: »

How can you categorically say this will happen without knowing the full facts of the case? I would appear that your Client was guilty of wrongful trading whereas in this instance you have no idea what happebned or even if the money is actually owed to the local council. You advice is ill advised and nothing more than scare mongering without the full facts. What happened to your client is extremely rare and not the norm. The actions taken by the OP fulfilled his fidiciary duty and on the only thing he did wrong was resign on the advice of another so called professional who had probably been on a weekend mentoring course and think they know what they are talking about!

One would hope that when questioning a Professionally Qualified Senior Partner in a firm you would at least spell the Fiduciary term correctly. You will find that since the Chancery Courts verdict two years ago the OR has had their powers bolstered. Philip Towers v Premier Waste Management Ltd [2011] changed the dynamics with respect to errant directors.

In any event, I have responded to the OP direct.

toddle2u

One would hope that when questioning a Professionally Qualified Senior Partner in a firm

In a firm of what? Bricklayers?? I always find that those who have to spout off anout their credentials have very little to shout about. Are you unable to give your advice on an open forum? Maybe the advice would be open to question?

Pennywise

Brassedoff wrote: »

As I said, there is a whole process that your Son will now go through via the Official Receiver. He can expect a charging order at least now, if less of an asset, then personal Bankruptcy followed by an appearance in Crown Court.

He "MAY" go through that process, but the vast majority of people won't. Your single experience of it happening once doesn't mean it happens to everyone. It's usually the worst cases only where further steps are taken, usually involving tens of thousands of pounds and clear dishonesty/fraud on the part of the director. I'd say the chances of the OR being involved in this case are close to zero.

Please don't go around scaremongering based on a single experience. I've just been through this with two of my clients, last year, and in both cases, the strike off went through and they've heard no more, despite in one case, monies owed being close to £10k to local authority, in the other, around £20k owed to the bank, and in both cases, several thousand owed to HMRC. It costs money for a creditor to appoint a receiver and they won't do that unless they know they're going to get enough money back to make it worthwhile. The OR can't get anything back from the old directors in most cases as usually it's difficult to prove that they've acted fraudulently or dishonestly - quite a high bar to reach that has to be proved in court.

If the business collapses due to bad luck, lack of sales, faulty goods, market conditions, etc., rather than fraud or theft or dishonesty or incompetence on the part of the directors, then the OR, even if appointed, will not have grounds for court action, and without court action, the OR can't touch the person's own money or make them bankrupt.

Yes, there's a risk that the OR gets appointed, and if that happens, then there's a risk that court proceedings will be instigated against an errant director, but both are very unlikely, and you certainly shouldn't be telling people that it's a foregone conclusion that such a remote possibility WILL happen.

Brassedoff

Pennywise wrote: »

He "MAY" go through that process, but the vast majority of people won't. Your single experience of it happening once doesn't mean it happens to everyone. It's usually the worst cases only where further steps are taken, usually involving tens of thousands of pounds and clear dishonesty/fraud on the part of the director. I'd say the chances of the OR being involved in this case are close to zero.

Please don't go around scaremongering based on a single experience. I've just been through this with two of my clients, last year, and in both cases, the strike off went through and they've heard no more, despite in one case, monies owed being close to £10k to local authority, in the other, around £20k owed to the bank, and in both cases, several thousand owed to HMRC. It costs money for a creditor to appoint a receiver and they won't do that unless they know they're going to get enough money back to make it worthwhile. The OR can't get anything back from the old directors in most cases as usually it's difficult to prove that they've acted fraudulently or dishonestly - quite a high bar to reach that has to be proved in court.

If the business collapses due to bad luck, lack of sales, faulty goods, market conditions, etc., rather than fraud or theft or dishonesty or incompetence on the part of the directors, then the OR, even if appointed, will not have grounds for court action, and without court action, the OR can't touch the person's own money or make them bankrupt.

Yes, there's a risk that the OR gets appointed, and if that happens, then there's a risk that court proceedings will be instigated against an errant director, but both are very unlikely, and you certainly shouldn't be telling people that it's a foregone conclusion that such a remote possibility WILL happen.

Yes, I accept what you say, however this is not a case if dishonesty, fraud, market conditions etc. It is a case of stupidity. If the local authority have gone to the trouble to halt the SO, then you can expect it will go through the process of getting wound up.

It is not a case of getting any funds from the former directors either. The stance of the OR, who is involved in the instance of a winding up order where there is insufficient funds to pay a liquidator is to find out why the directors thought it perfectly normal to simply walk away from their obligations without taking the correct steps. Now, in the case of the OP, they have the fall back that someone claiming to be qualified in business law giving them advice that was clearly wrong. They will have or should have recall upon the advisor. I would expect the OR to ask the advisor on what basis the advice was given and in their report repudiate or admonish it.

My experience of several dozen referrals to the OR in the last five years alone have had many just going through the issue with respect to a grilling at the regional office after having to complete the onerous paperwork.

In the two cases of errant directors, that being those who resign in the hope that it all goes away have however been different. Those who believe they are able to simply walk away despite clear and concise laws as revised in the CO 2006, are now finding that being called to account in almost every instance is now the norm.

The change in policy could be seen as far back as 2010. The advice from the first "financial advisor", who clearly did not know business law is indicative of the type of advice you see on here, whereby people setting up businesses are advised that in order to save money first time directors simply go to the £9.99 sites to form a company, having not taken any professional advice either on their duties and responsibilities, nor, the financial implications of becoming a director.

In my experience and in the trade press you see dozens of articles every month where any directors running debts to statutory and authority bodies. That no longer have the benefit of being preferential creditors, is pursued in another fashion. That being referred to the OR's investigation teams in Leicester.

When you go to the seminars they tell you openly that those not seeking the proper guidance at the start if they have no training or qualifications will be rigorously tested through the agency. The days of people being able to say "I didn't know" are no longer accepted.

toddle2u wrote: »

In a firm of what? Bricklayers?? I always find that those who have to spout off anout their credentials have very little to shout about. Are you unable to give your advice on an open forum? Maybe the advice would be open to question?

Yes, that's right, I am an hod carrier by day and cyber warrior at night. I have been outed.