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  • FIRST POST
    • evman99
    • By evman99 7th Jan 18, 3:04 PM
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    evman99
    Company trading while in liquidation - what rights do I have?
    • #1
    • 7th Jan 18, 3:04 PM
    Company trading while in liquidation - what rights do I have? 7th Jan 18 at 3:04 PM
    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.
Page 1
    • unholyangel
    • By unholyangel 7th Jan 18, 3:33 PM
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    unholyangel
    • #2
    • 7th Jan 18, 3:33 PM
    • #2
    • 7th Jan 18, 3:33 PM
    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?
    Money doesn't solve poverty.....it creates it.
    • evman99
    • By evman99 7th Jan 18, 3:38 PM
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    evman99
    • #3
    • 7th Jan 18, 3:38 PM
    • #3
    • 7th Jan 18, 3:38 PM
    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.....
    • By AndyMc..... 7th Jan 18, 3:41 PM
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    AndyMc.....
    • #4
    • 7th Jan 18, 3:41 PM
    • #4
    • 7th Jan 18, 3:41 PM
    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.
    Originally posted by evman99
    Which is probably what you’ll recover.
    • bris
    • By bris 7th Jan 18, 3:49 PM
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    bris
    • #5
    • 7th Jan 18, 3:49 PM
    • #5
    • 7th Jan 18, 3:49 PM
    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
    • By steampowered 7th Jan 18, 3:53 PM
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    steampowered
    • #6
    • 7th Jan 18, 3:53 PM
    • #6
    • 7th Jan 18, 3:53 PM
    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
    • By steampowered 7th Jan 18, 3:54 PM
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    steampowered
    • #7
    • 7th Jan 18, 3:54 PM
    • #7
    • 7th Jan 18, 3:54 PM
    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)
    Originally posted by evman99
    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.

    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.
    Originally posted by unholyangel
    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: '!!!8220;shadow director!!!8221;, 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.....
    • By AndyMc..... 7th Jan 18, 3:56 PM
    • 1,576 Posts
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    AndyMc.....
    • #8
    • 7th Jan 18, 3:56 PM
    • #8
    • 7th Jan 18, 3:56 PM
    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.
    Originally posted by bris
    It could well be and the op would have nothing to lose by getting onto Action Fraud.
    • evman99
    • By evman99 7th Jan 18, 4:09 PM
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    evman99
    • #9
    • 7th Jan 18, 4:09 PM
    • #9
    • 7th Jan 18, 4:09 PM
    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
    • By unholyangel 7th Jan 18, 4:45 PM
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    unholyangel


    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: '!!!8220;shadow director!!!8221;, in relation to a company, means a person in accordance with whose directions or instructions the directors of the company are accustomed to act.".
    Originally posted by steampowered
    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.
    Money doesn't solve poverty.....it creates it.
    • Johno100
    • By Johno100 7th Jan 18, 4:51 PM
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    Johno100
    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.
    Originally posted by evman99
    And when you brought this information to the attention of the Liquidator of the company what was his/her response?
    • evman99
    • By evman99 7th Jan 18, 4:56 PM
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    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
    • By Johno100 7th Jan 18, 5:14 PM
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    Johno100
    You've misunderstood my post.

    If he is a director, his wife is not the sole director.
    Originally posted by unholyangel
    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.

    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.
    Originally posted by unholyangel
    Bad advice there, throwing good money after bad.

    !!!8226; 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.
    !!!8226; 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.
    !!!8226; 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
    • By arcon5 7th Jan 18, 5:28 PM
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    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.
    Last edited by arcon5; 07-01-2018 at 5:31 PM.
    • steampowered
    • By steampowered 7th Jan 18, 5:34 PM
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    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.

    The wife submitted a LIQ02 form and it was a "creditors voluntary liquidation"
    Originally posted by evman99
    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.

    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.
    Originally posted by Johno100
    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.
    Last edited by steampowered; 07-01-2018 at 5:37 PM.
    • Johno100
    • By Johno100 7th Jan 18, 5:35 PM
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    Johno100
    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.
    Originally posted by arcon5
    The OP paid the husband not the wife.
    • AndyMc.....
    • By AndyMc..... 7th Jan 18, 5:36 PM
    • 1,576 Posts
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    AndyMc.....
    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.
    Originally posted by arcon5
    The OP paid the husband.
    • Johno100
    • By Johno100 7th Jan 18, 5:42 PM
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    Johno100

    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.
    Originally posted by steampowered
    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
    • By unholyangel 7th Jan 18, 6:16 PM
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    unholyangel
    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.
    Originally posted by Johno100
    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).
    Money doesn't solve poverty.....it creates it.
    • stuartJo1989
    • By stuartJo1989 7th Jan 18, 7:06 PM
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    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.
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