Company trading while in liquidation - what rights do I have?

evman99

I booked a marquee for a party in December from a LTD company - we paid a 35% deposit to the company in Jan 2017. The company was managed by a shadow director and his wife who was the sole director. The marriage broke down and in November 2017 she placed the company into voluntary liquidation. As a creditor we received no notification of this change in status - the website and FB page remains active even until today. In early December, after the company went into liquidation, the shadow director contacted us to make final payment. He continued to use the company trading name letterhead, logo and email address but changed the bank details to his personal bank account. We made the final payment of 65% in full to the bank details he provided. He failed to supply the marquee on the day of the party and disappeared with our money. From what I understand the shadow director has no assets, his now separated wife however does have assets. Here are my questions to decide my next course of action with the aim to try and get my money returned.... 1)Does the wife as the director have any personal liability for the company trading while in liquidation even though it was done by her husband who was a shadow director? 2)Does the wife have any personal liability for her husband continuing to use the trading name of the business (using a prohibited name) 3)Does the receiver or the director have any responsibility for failing to notify the creditors who paid deposits into the company bank accounts or for failing to pull down the company website/email address effectively allowing the husband to continue to trade and defraud others. Any advice from a insolvency practitioner would be appreciated. The claim is around £4k.

unholyangel

How could the husband be a shadow director if the wife is the sole director? Either he is a director of the company or he isn't. What does it say on companies house, who is listed as officers of the company? If he isn't on there, did his wife know he was portraying himself as a director?

Also, have you objected to the winding up of the company via companies house?

evman99

She was the sole director of the company and had no day to day involvement, He was running the company. In the liquidation documents posted on the companies house website, he was stated as a "shadow director". His wife knew he was portraying himself as a director of the company.

I have not yet objected to the winding up of the company - I am trying to work out the best way forward to try and receive some of the funds back. At the time of liquidation, the company was listed with zero assets.

AndyMc.....

evman99 wrote: »

She was the sole director of the company and had no day to day involvement, He was running the company. In the liquidation documents posted on the companies house website, he was stated as a "shadow director". His wife knew he was portraying himself as a director of the company.

I have not yet objected to the winding up of the company - I am trying to work out the best way forward to try and receive some of the funds back. At the time of liquidation, the company was listed with zero assets.

Which is probably what you’ll recover.

bris

It may very well be fraud, a shadow director can be held liable the same as a director. By changing the bank details to his personal account and accepting payment for a liquidated company is very shady indeed.


The wife may be an innocent party to this and not even know. A trip to a solicitor that's knows company law would be advisable, even giving companies house a call may help.

steampowered

I think you should start a small claim against the man personally.

The fact that he was using a personal bank account and that the company had been wound up would indicate that you contracted with an individual, rather than with a company.

More detailed answers in the next post ...

steampowered

evman99 wrote: »

1)Does the wife as the director have any personal liability for the company trading while in liquidation even though it was done by her husband who was a shadow director? 2)Does the wife have any personal liability for her husband continuing to use the trading name of the business (using a prohibited name)

No, it is difficult to see how the wife would be liable for the husband trading without her knowledge.

3)Does the receiver or the director have any responsibility for failing to notify the creditors who paid deposits into the company bank accounts or for failing to pull down the company website/email address effectively allowing the husband to continue to trade and defraud others. Any advice from a insolvency practitioner would be appreciated. The claim is around £4k.

You are confusing different technical terms. Receivership, administration, liquidation and winding up are all very different processes.

From what you've said, it sounds that the company would have been wound-up by the wife filing a form with companies house. In this situation no insolvency practitioner would have been appointed.

If I'm right, the wife would have had to file form DS01 with Companies House, and would have had to notify creditors. If she failed to do she will have technically committed a criminal offence under the Companies Act. In reality though, that is difficult for a creditor to enforce.

Directors who continued to trade after a winding-up form had been filed may also be guilty of wrongful trading / fraudulent trading, but again that's difficult for a creditor to enforce.

unholyangel wrote: »

How could the husband be a shadow director if the wife is the sole director? Either he is a director of the company or he isn't.

It is possible to be a shadow director of a company even if you have never been formally appointed and never registered with Companies House. Shadow directors owe common law fiduciary duties and statutory duties under the Companies Act in the same way as a regular director.

See section 251 of the Companies Act 2006: '“shadow director”, in relation to a company, means a person in accordance with whose directions or instructions the directors of the company are accustomed to act.".

AndyMc.....

bris wrote: »

It may very well be fraud, a shadow director can be held liable the same as a director. By changing the bank details to his personal account and accepting payment for a liquidated company is very shady indeed.


The wife may be an innocent party to this and not even know. A trip to a solicitor that's knows company law would be advisable, even giving companies house a call may help.

It could well be and the op would have nothing to lose by getting onto Action Fraud.

evman99

Thanks for your reply .....

The wife submitted a LIQ02 form and it was a "creditors voluntary liquidation"

A liquidator has been appointed

The assets were listed as unknown as they had been requested from the shadow director but it had not yet arrived.

unholyangel

steampowered wrote: »

It is possible to be a shadow director of a company even if you have never been formally appointed and never registered with Companies House. Shadow directors owe common law fiduciary duties and statutory duties under the Companies Act in the same way as a regular director.

See section 251 of the Companies Act 2006: '“shadow director”, in relation to a company, means a person in accordance with whose directions or instructions the directors of the company are accustomed to act.".

You've misunderstood my post.

If he is a director, his wife is not the sole director.

But personally if I were going to chase this I would chase all 3 - the company and both the husband and wife personally. Let the courts work out who has liability for what.

Johno100

evman99 wrote: »

Thanks for your reply .....

The wife submitted a LIQ02 form and it was a "creditors voluntary liquidation"

A liquidator has been appointed

The assets were listed as unknown as they had been requested from the shadow director but it had not yet arrived.

And when you brought this information to the attention of the Liquidator of the company what was his/her response?