Chase a New Company for the Debt of an Old Company

kibble123

I can go into more detail if people want but this is the gist.

I took a company to court over parking fines they racked up on a car that was in their possession and should of re-registered to themselves.

I won the small claims court case and instructed the bayliffs to execute.
They went to the property to be told that the "Debtor had ceased trading there and the debtor had no saleable goods at the address (this address was a directors house from companies house).

So this director closed the garage/Car Sales company down and opened a garage/Car Sales in a similar name i.e. to get rid of debts off old company and start trading a fresh with a new company.

Surely there has to be a way I can chase the New company for the old debt as the law loophole for this sort of practice must of been closed?

He surely cant get away with this I know of at least 1 other person chasing him for money for similar thing where they have won their in the small claim court also.

lincroft1710

You can only pursue the company you obtained judgement against. If it no longer exists and no longer has assets, then I'm afraid that is it, Apparently a very common ploy by unscrupulous motor traders

Bookworm105

a company is a distinct legal entity so if the company is deceased you cannot chase it, just like trying to get money out of a corpse in a graveyard is rather fruitless.

what does the company's liquidator say regarding your status as a creditor of the deceased company?

does the corpse have any director guarantees in place which may offer a way to pursue the corpse for money even after the event?

did you object as an outstanding creditor when "they" applied to close down the company?

DullGreyGuy

kibble123 said:

I can go into more detail if people want but this is the gist.

I took a company to court over parking fines they racked up on a car that was in their possession and should of re-registered to themselves.

I won the small claims court case and instructed the bayliffs to execute.
They went to the property to be told that the "Debtor had ceased trading there and the debtor had no saleable goods at the address (this address was a directors house from companies house).

So this director closed the garage/Car Sales company down and opened a garage/Car Sales in a similar name i.e. to get rid of debts off old company and start trading a fresh with a new company.

Surely there has to be a way I can chase the New company for the old debt as the law loophole for this sort of practice must of been closed?

He surely cant get away with this I know of at least 1 other person chasing him for money for similar thing where they have won their in the small claim court also.

A company is a legal entity in its own right which is separate and distinct from its directors and/or shareholders. 

You sent bailiffs to the directors home, as the former company's registered address, but the bailiff can only cease items belonging to the company not to the director themselves because your court judgement is against the company. 

You need to see, on Companies House, what has happened to the old company. Is it going through insolvency? In which case register your interest with the Administrators/Insolvency Practitioner. They have powers to unwind wrongful transactions and/or ban people from being directors however they are also very pragmatic people and in many cases people get a few pence per pound they are owed, if anything. 

Your better option is ensuring directors in the future give a personal guarantee, in that case when their small business folds you can pursue them personally for the debt rather than being a bird circling for the few scraps left of the old company's resources. 

You will never be able to sue the new company for the old company's debts.

kibble123

The company Dissolved on 28 May 2024 and the bayliffs went round on 7 Oct 2024

The new company opened 24 Mar 2024 and is basically the same name 1 is ######## Motors LTD and the new one is ######## Automotive LTD

Surely be having the same people on the board they should be held accountable for this dodgy practice of just closing companies and writing off debts. Can I not flag this to the Government and get them to look at these people for debt/tax evasion?

Date(document was filed at Companies House)	Description(of the document filed at Companies House)	View / Download(PDF file, link opens in new window)
28 May 2024	Final Gazette dissolved via compulsory strike-off
16 Apr 2024	Compulsory strike-off action has been suspended
12 Mar 2024	First Gazette notice for compulsory strike-off
26 Nov 2023	Confirmation statement made on 16 November 2023 with updates

DullGreyGuy

If you are litigating against a company you should subscribe to the Gazette to get notifications for any actions taken against it. When the 12th March notification was published you could have objected to the strike off due to the litigation 

Ultimately there is a court process to reinstate such a company but the application costs c£350 and even if it is restored there are no assurances it has any assets to repay you.

No, you would have needed to get personal guarantees to hold the directors liable. You're effectively saying you want to be able to sue/punish the parents or brother of someone for their behaviour. The two companies are separate entities even if they have same directors/shareholders(/parents)

kibble123

they using the same website same business address same people but they can rack up X amount in debts, dissolve the company and restart it under a new name without any penalty. Surely in the 1980's this was ok but now there must be penalties against the directors for doing this? 

Tucosalamanca

kibble123 said:

they using the same website same business address same people but they can rack up X amount in debts, dissolve the company and restart it under a new name without any penalty. Surely in the 1980's this was ok but now there must be penalties against the directors for doing this? 

The rules are to encourage start ups, people will take the risk of opening a business, knowing that it doesn't mean possible financial ruin if things don't work out.
It also means that entrepreneurs/risk takers aren't prevented from trying again.

I'm not saying the rules are perfect (they're not) but unfortunately some people will always exploit the system.

Bookworm105

kibble123 said:

they using the same website same business address same people but they can rack up X amount in debts, dissolve the company and restart it under a new name without any penalty. Surely in the 1980's this was ok but now there must be penalties against the directors for doing this? 

the ability to object to closure of a company and thus (potentially) stop its closure is the "penalty"

unfortunately you were not watching the ball so no, there is nothing to stop a company closing and restarting with the same people if its closure is not stopped by its creditors.
it is a new company entirely unrelated to the old one since it has a different name (even if only fractionally different!)

unless the individuals have been legally struck off as directors (an action which only Companies House can do) then they can rinse and repeat as many times as they like.

DullGreyGuy

kibble123 said:

they using the same website same business address same people but they can rack up X amount in debts, dissolve the company and restart it under a new name without any penalty. Surely in the 1980's this was ok but now there must be penalties against the directors for doing this? 

The "penalty" is at some point someone more on the ball will see they've failed to file paperwork etc so Companies House issue the strike off notice and objects, it just needs to be someone owed enough to make it worth while to try wind it up via administration. The receiver can bar them from being directors again etc if they feel there was real wrong doing.