UK Legal position of CVA company starting and trading with a newly created company

May 24, 2016
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United Kingdom
Hi. First time poster curious about the legal position of a company who, 12 months in on a 3 plus year CVA with one company, formed another through which they traded for 20 months building up over £100K more debt with 40+ new unsecured creditors? Same directors for both companies declared voluntary liquidation and the Insolvency Practitioner Supervisor terminated the CVA (with original company) without any reference to the second company in its official report - almost as if they had been and remained unaware of it!

Hope this makes sense as I fear I might not have explained it very well.

As well as whether or not the actions of the directors were legal to form a second company when committed to a legally binding agreement I would like to know whether the IP's work could be considered of a reasonable professional standard to have, one way or another, supervised a CVA which, through its prolongation, effectively allowed the directors to build up so much more debt?

Astonishingly, all of the voluntary contributions made by the original company went to pay the IP's bill which had jumped from their original estimate of £20K to well over £50K due apparently to the difficulty in trying to keep the company to the terms of the agreement. At termination time the company were in breach of 5 major conditions - without taking into account their 'new company' mis-adventure.

I would be very grateful for any views/opinions.
Thanks in advance


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