Wedding venue has cancelled - bankrupt. Where do I stand?

steampowered

Dizzy078 wrote: »

Hi, thanks again for your continued help. I'm afraid I've got some bad news now. Saturday I got an email from the court saying she has now filed a defence. She is arguing (as predicted) that the debt is with her company and not her personally.

What you should now do is review all written evidence that might be available to determine whether you have a good case for arguing that the contract was with this lady rather than with the company, or not. Let us know whether the company name appears on emails/invoices and so on.

So now I'm back to square one and Ive been given until the 29th of may to apply to get a court date. I was thinking about mediation and asking for most of the money back because at this point I'm really not sure what a judge would make of it.

Mediation can sometimes help, or it can be a giant waste of time.

You could make the point that - even if you are forced to pursue the company - that could still be a giant headache for the director. Because you will be able to stop the striking-off; and seek an order for her to attend court for questioning about the company's assets; and potentially start proceedings against the director for breach of their directors' duties and breach of insolvency legislation. You could ask for example if she was still drawing a salary while she knew the company was unable to pay its debts - she is not permitted to do this as that is preferring one creditor (herself) over other creditors (such as you).

Plus, if we went to court and I lost, could I be asked to pay her legal fees if she had a solicitor represent her?

Legal costs are not usually awarded in small claims track. However, they can be awarded in cases where a party is seen to have 'behaved unreasonably'. This is possible if the judge concludes your claim is hopeless, but very unlikely if the judge thinks you had a reasonable argument but ends up deciding against you.

The court claim online still states the CCJ application is in progress so it's a little confusing. My experience using the online system so far is that it's been chaotic and slow. I guess the status will be updated with her defence shortly. I just don't know why I've been informed of the defence until after the deadline has passed. (It appears the defence was sent by email and not letter).

Yes, the system is a bit chaotic. What does the defence say exactly?

dizzy078_2

steampowered wrote: »

What you should now do is review all written evidence that might be available to determine whether you have a good case for arguing that the contract was with this lady rather than with the company, or not. Let us know whether the company name appears on emails/invoices and so on.


Mediation can sometimes help, or it can be a giant waste of time.

You could make the point that - even if you are forced to pursue the company - that could still be a giant headache for the director. Because you will be able to stop the striking-off; and seek an order for her to attend court for questioning about the company's assets; and potentially start proceedings against the director for breach of their directors' duties and breach of insolvency legislation. You could ask for example if she was still drawing a salary while she knew the company was unable to pay its debts - she is not permitted to do this as that is preferring one creditor (herself) over other creditors (such as you).


Legal costs are not usually awarded in small claims track. However, they can be awarded in cases where a party is seen to have 'behaved unreasonably'. This is possible if the judge concludes your claim is hopeless, but very unlikely if the judge thinks you had a reasonable argument but ends up deciding against you.


Yes, the system is a bit chaotic. What does the defence say exactly?

Apologies for the late reply, I've been busy with a few things as of late.


The defence simply states the money was not paid to her personally but to a limited company. She then attached the invoice she sent after I paid and a copy of her two solicitors lettesr. She then makes up some excuses about being uncontactable. At this stage my best bet may be to try mediation, and ask for the full deposit back (but not the interest & court fee). My leverage being that I can stop the strike off and as you suggest she will need to appoint an insolvency practitioner who I am sure will scrutinise the accounts of the company.


I think I'm going to have a hard time convincing a judge that the debt is owed personally, given that the money was paid to the company account.

its_all_over

dizzy078 wrote: »

I think I'm going to have a hard time convincing a judge that the debt is owed personally, given that the money was paid to the company account.

More like an impossibility. If you paid the limited company it's a matter of law that the director isn't personally liable, you won't even get to argue the point imo.

garth549

I've always been under the impression that a director of a ltd company can become liable for its debts if they continue trading while knowingly insolvent.

Could this apply here?

its_all_over

garth549 wrote: »

I've always been under the impression that a director of a ltd company can become liable for its debts if they continue trading while knowingly insolvent.

Could this apply here?

Not according to this table.

Instances in Which a Director Could Be Held Liable For Company Debts

Directors' personal liabilities for company debts can be proved if it can be shown that they performed any inappropriate actions:

Continuing to pay shareholders dividends whilst the company is insolvent

Using fraudulent methods to raise the funds needed to repay creditors (i.e. – obtaining financing using misleading or inaccurate information, or collecting payment for goods or services that could not be delivered)

Withdrawing and/or using company funds for non-business activity; this is an offence known as misfeasance

Entering into a personal guarantee and then breaching its terms

Disposing of the company's assets at undervalue or no value

Overpaying yourself from your company; creating a large overdrawn directors' loan account. This will be repayable during an insolvency process as the money is deemed an asset of the company.

https://www.realbusinessrescue.co.uk/business-insolvency/trading-insolvent-director-responsibilities/can-directors-be-held-liable-for-company-debts-in-a-ltd-company

pelirocco

I see the striking off has been suspended, but you need to watch that she doesnt apply for i again , once she thinks no one is looking . Op does she run her business from her home?

pelirocco

The business at 30 12.2016 was showing assetts of £12836.00

timbstoke

It seems to me that you've given yourself a few different angles to approach this from. The court case against her is probably a non starter, especially if you paid into a company account. As a separate legal entity, that means you've never given her any money.

Starting fresh proceedings against the company immediately gives you the evidence you need to stop the striking off. Since the company has significant debt already, it doesn't necessarily give you a better chance of getting your money back. Somebody else already suggested that you need to get high court bailiffs down there as soon as possible if you win.

This is a case where the strict legal routes available to you aren't necessarily the best way to deal with it, and a little thinking outside the box will yield far better results. Striking off a company is considerably cheaper (£10) than liquidation (easily £5000+VAT for even a small company). It sounds like she's hoping to make the company quietly disappear off the books, in the hope that all her creditors will then disappear with it. That's not how it works, but I doubt she's bothered doing her research.

Personally, I'd visit her in person and explain her options to her. Option one is that she refunds you in full and you go away with no further interest in her business affairs. Option two is that you issue a new claim against the company. That will prevent her from being struck off, and you'll be presenting the letter from the solicitor confirming that the company is insolvent in court, where you'll also be asking a number of interesting questions relating to any wages she is drawing during the insolvency, details of any dividends paid out in the last two years, and the current status of the Directors Loan account.

dizzy078_2

timbstoke wrote: »

It seems to me that you've given yourself a few different angles to approach this from. The court case against her is probably a non starter, especially if you paid into a company account. As a separate legal entity, that means you've never given her any money.

Starting fresh proceedings against the company immediately gives you the evidence you need to stop the striking off. Since the company has significant debt already, it doesn't necessarily give you a better chance of getting your money back. Somebody else already suggested that you need to get high court bailiffs down there as soon as possible if you win.

This is a case where the strict legal routes available to you aren't necessarily the best way to deal with it, and a little thinking outside the box will yield far better results. Striking off a company is considerably cheaper (£10) than liquidation (easily £5000+VAT for even a small company). It sounds like she's hoping to make the company quietly disappear off the books, in the hope that all her creditors will then disappear with it. That's not how it works, but I doubt she's bothered doing her research.

Personally, I'd visit her in person and explain her options to her. Option one is that she refunds you in full and you go away with no further interest in her business affairs. Option two is that you issue a new claim against the company. That will prevent her from being struck off, and you'll be presenting the letter from the solicitor confirming that the company is insolvent in court, where you'll also be asking a number of interesting questions relating to any wages she is drawing during the insolvency, details of any dividends paid out in the last two years, and the current status of the Directors Loan account.

The fiasco continues...


For the post above, yes she runs the business from home (the wedding venue is her home).


So last night I sent an email again asking for the deposit and outlining that should I receive it back I will withdraw my complaint to companies house & small claims court claim. I explained the rules they had broken applying for a strike off instead of insolvency and I had the evidence to show companies house all of this.


I have this morning received an email back stating she has attempted to contact companies house on the 30th of April to withdraw the strike off, as she had been ill-advised due to the position of the company (is she blaming her solicitor telling her to strike it off??)


She then goes on to say she was then informed an objection to the strike off had already received to which had stopped the procedure. She says the company is not in a position to pay back the company and there is a meeting scheduled in the beginning of June regarding formal solvency advice.


The letter ends with "I have been assured that the insolvency practitioners will be in contact with all concerned in due course and the matter dealt with appropriately and in accordance with the correct procedure."






Now, my option is, as mentioned by the above post, therefore to send her a letter before action to the company, sending that as evidence to companies house that the company owes a debt. I am not sure what they'll come back with if its true that she has really applied to withdraw the strike off.


I have had look today on the Bassetlaw council website and I can see that they have had two temporary event notices granted for June 2nd and June 9th at her premises. So obviously they have weddings on those days and are still trading. The licences are in a different name to I have seen before (ie. not one of the two company directors).


Now, is she allowed to continue trading (hosting weddings) given that she has stated the company is insolvent back in March? Who do I report this to if she cannot? Companies House asked for invoice evidence that trading is taking place, of course I don't have this but I could go down and take a few photos from the street, and the licences are available to see on the internet.


Regarding court action now, should I continue with my original claim & change the debtor to the company or start a new claim altogether? This is going to cost me another £100 or so to do either. Should I bother? I won't be able to get baliffs down there in the short time scale before the second wedding in June I would imagine.


On a side note does the insolvency practitioner go through all the accounts, finances etc and ensure the directors have behaved properly? I would really like to know what shes been doing with all the deposits she has been receiving, she must have been given tens of thousands of pounds over the last year or so for future weddings.


Ugh. I'm still mad & losing sleep over this!!


I appreciate for any help/advice given further.

its_all_over

dizzy078 wrote: »

The fiasco continues...


For the post above, yes she runs the business from home (the wedding venue is her home).


So last night I sent an email again asking for the deposit and outlining that should I receive it back I will withdraw my complaint to companies house & small claims court claim. I explained the rules they had broken applying for a strike off instead of insolvency and I had the evidence to show companies house all of this.


I have this morning received an email back stating she has attempted to contact companies house on the 30th of April to withdraw the strike off, as she had been ill-advised due to the position of the company (is she blaming her solicitor telling her to strike it off??)


She then goes on to say she was then informed an objection to the strike off had already received to which had stopped the procedure. She says the company is not in a position to pay back the company and there is a meeting scheduled in the beginning of June regarding formal solvency advice.


The letter ends with "I have been assured that the insolvency practitioners will be in contact with all concerned in due course and the matter dealt with appropriately and in accordance with the correct procedure."

I'm not a lawyer, but I'm pretty sure if she was to refund you now it would be illegal and even if it she did I think there's a procedure whereby the OR can actually come after you (or it might be her, in her personal capacity?) to retrieve the money. She is not allowed to show favour to a specific creditor once it is apparent the company is insolvent.

I have had look today on the Bassetlaw council website and I can see that they have had two temporary event notices granted for June 2nd and June 9th at her premises. So obviously they have weddings on those days and are still trading. The licences are in a different name to I have seen before (ie. not one of the two company directors).


Now, is she allowed to continue trading (hosting weddings) given that she has stated the company is insolvent back in March? Who do I report this to if she cannot? Companies House asked for invoice evidence that trading is taking place, of course I don't have this but I could go down and take a few photos from the street, and the licences are available to see on the internet.

What would stop her from hiring her house out to other people hosting weddings? I don't think that is going to help your case.

Regarding court action now, should I continue with my original claim & change the debtor to the company or start a new claim altogether? This is going to cost me another £100 or so to do either. Should I bother? I won't be able to get baliffs down there in the short time scale before the second wedding in June I would imagine.

As she has an absolute defence (she isn't personally liable) you would be wasting your time and money trying to pursue the case against her. You could try a new claim against the company but I wouldn't be expecting any money back if the business is made insolvent before you could get a judgement and instruct a HCEO (even if there still were any assets available).

I think your anger at having made such a bad mistake by giving cash over is colouring your judgement, you are likely throwing good money after bad chasing an insolvent company.