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

evman99

I haven't yet contacted the liquidator.

I spoke with the shadow director last week and he promised to pay me back by Friday which he didn't. So now I'm working out next steps.

Johno100

unholyangel wrote: »

You've misunderstood my post.

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

And you've clearly mis-understood what a Shadow Director is. A shadow director is a person in accordance with whose directions or instructions the director(s) of a company are accustomed to act. By their very nature, being in the shadows, they are not appointed formerly as a director so wont show on Companies House records. So in this case the wife is the sole appointed director.

unholyangel wrote: »

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.

Bad advice there, throwing good money after bad.

• The company is in Liquidation, the OP should if they have not already notify the Liquidator of their claim and complete the necessary forms. Trying to claim through the courts against a company in Liquidation is pointless, it will cost money and they'll be in no better position than they are now.
• The wife as a director of the company is protected by limited liability. The OP's claim is against the company which is a separate legal entity to its directors.
• The husband, the OP doesn't seem to have communicated with Liquidator at this time. It could be that he has indeed ripped off the OP by pocketing the balance after Liquidation. It could also be possible there has been some sort of sale of the assets including the book debts to the husband or he is collecting book debts on behalf of the liquidator. The OP wont know until they've spoken to the liquidator.

arcon5

Contact the liquidators. She has committed an offence. Not only that opened herself up to being sued personally as you paid the individual not the company.

You cannot continue trading when you become insolvent and certainly not when in liquidation. The liquidator should be independent and should investigate this so definitely speak to them.

Contact the liquidators about this situation. And advice the woman if you don't receive a refund you will be taking her personally to court as it was her you paid not the company.

steampowered

I think unholynagel is saying that,
if the man is a shadow director, the wife is a director but not the 'sole director'. Which sounds correct to me.

evman99 wrote: »

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

Ah, thank you. This is a liquidation rather than a winding up. It is a bit strange that a creditors voluntary liquidation was used - this suggests that the company might have other debts.

Johno100 wrote: »

The wife as a director of the company is protected by limited liability. The OP's claim is against the company which is a separate legal entity to its directors.

I disagree. When a company enters liquidation, the directors cease to have authority to represent the company. The power to represent the company moves to the liquidator.

If the directors enter into a contract with a third party in such circumstances, the company will not be bound to it. The individual will find themselves personally liable for that contract.

The fact that this individual used a personal bank account, and the fact that the individual promised to pay back the money despite the company being in liquidation, is further evidence that the contract was with him personally rather than with the company.

Personally, I wouldn't bother chasing the company as it seems like a waste of time given that the company is in liquidation. I wouldn't chase the wife as I don't see a legal basis for her to be personally liable. I would issue a small claim against the husband if payment is not made promptly.

Johno100

arcon5 wrote: »

Contact the liquidators. She has committed an offence. Not only that opened herself up to being sued personally as you paid the individual not the company.

You cannot continue trading when you become insolvent and certainly not when in liquidation. The liquidator should be independent and should investigate this so definitely speak to them.

Contact the liquidators about this situation. And advice the woman if you don't receive a refund you will be taking her personally to court as it was her you paid not the company.

The OP paid the husband not the wife.

AndyMc.....

arcon5 wrote: »

Contact the liquidators. She has committed an offence. Not only that opened herself up to being sued personally as you paid the individual not the company.

You cannot continue trading when you become insolvent and certainly not when in liquidation. The liquidator should be independent and should investigate this so definitely speak to them.

Contact the liquidators about this situation. And advice the woman if you don't receive a refund you will be taking her personally to court as it was her you paid not the company.

The OP paid the husband.

Johno100

steampowered wrote: »

The fact that this individual used a personal bank account, and the fact that the individual promised to pay back the money despite the company being in liquidation, is further evidence that the contract was with him personally rather than with a company in liquidation.

Personally, I wouldn't bother chasing the company as it seems like a waste of time given that the company is in liquidation. I wouldn't chase the wife as I don't see a legal basis for her to be personally liable. I would issue a small claim against the husband if payment is not made promptly.

BIB that was only posted by the OP while I was compiling my post and does seem to put a different light on matters. I'd therefore probably agree with your final paragraph with the proviso the OP checks with the Liquidator that they have the full story.

unholyangel

Johno100 wrote: »

And you've clearly mis-understood what a Shadow Director is. A shadow director is a person in accordance with whose directions or instructions the director(s) of a company are accustomed to act. By their very nature, being in the shadows, they are not appointed formerly as a director so wont show on Companies House records. So in this case the wife is the sole appointed director.



Bad advice there, throwing good money after bad.

• The company is in Liquidation, the OP should if they have not already notify the Liquidator of their claim and complete the necessary forms. Trying to claim through the courts against a company in Liquidation is pointless, it will cost money and they'll be in no better position than they are now.
• The wife as a director of the company is protected by limited liability. The OP's claim is against the company which is a separate legal entity to its directors.
• The husband, the OP doesn't seem to have communicated with Liquidator at this time. It could be that he has indeed ripped off the OP by pocketing the balance after Liquidation. It could also be possible there has been some sort of sale of the assets including the book debts to the husband or he is collecting book debts on behalf of the liquidator. The OP wont know until they've spoken to the liquidator.

As steampowered says, if the husband is a director (whether shadow or otherwise) the wife is not a sole director.

As for the latter part, the protection offered by limited company status is not absolute. For example if they breach the requirements of the companies act or if tortious liability arises perhaps through a fraudulent misrepresentation or if they continue trading when they're aware there is no reasonable prospect of the business avoiding insolvency.

Plus from the circumstances OP mentioned (wife director but not involved in day to day running and the husband ran it but is not officially appointed as a director) about the set up, theres a good chance the husband shouldn't have had anything to do with the managing/directing of the company. That set up is typical of people who aren't allowed to be directors themselves (perhaps because they were disqualified or subject to an undischarged bankruptcy).

stuartJo1989

I'm not as knowledgeable as others here on this sort of thing, but if you go on companies house and check the filing history all the way back to the incorporation of the company then *usually* there will be a document whereby the stakeholders have filed a home address.

I'd consider sending a letter before action to this address and suggest that, as it was a personal bank account, you will be taking them to court personally (and not the business) if payment is not arranged.

I'd probably do that if it was your last option, as it would be a bit of a bluff on your part.