Liquidation scam?


J

James

I was a director of a company which I resigned from because the rest of the
directors were driving the company rapidly into insolvency - I put it down
to incompetence but....

After I resigned the company went into liquidation (suprise suprise) owing
me and a lot of other people lots of money. All was lost including my
shares (one director/investor took all the assets as he had a debenture). I
since discovered that an agreement to sell the companies assets to another
company had been signed a few weeks BEFORE the liquidation and the other
directors re-employed by the new company to carry on the business in
another name.

Is that legal? Have I been stitched up? Know any good (cheap) lawyers?
 
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S

S Shortem

Not an expert, but I think you would need to demonstrate that the other
directors had acted illegally or unfairly in their conduct.

There is case law (Foss v Harbottle) that basically says a minority
shareholder is bound by the majority because it is the company that is the
proper plantiff, ie it is the company that should sue for the damage where
the directors have acted inappropriately. Obviously in this case the company
has been liquidated,. and so can't take action to protect its assets.

However, Section 459 (Companies Act) can afford protection to minority
shareholders, basically you need to show that your investment has been
seriously damaged by "unfair" practice. I am not sure how this applies to an
already liquidated company, but you might be able to show that your rights
as a minority shareholder were breached.


Some basic info is at this link:
http://users.aber.ac.uk/uuk/comp7minorities.html

That said, if the directors have acted properly then there is little room
for you to fight on. In essence creditors are always paid before
shareholders on a liquidation, and so despite the asset sale, if the assets
did not cover the debts (including debentures which are just loans) then it
would be hard for you get any money out.

If you were going to fight this, you would need to get a specialist in
company law. I doubt they will be cheap, but I guess it depends on the size
of the company, certainly at the big PLC end rates are very high, but there
must be people who also do work for smaller companies and therefore have
appropriate rates.



I was a director of a company which I resigned from because the rest of the
directors were driving the company rapidly into insolvency - I put it down
to incompetence but....

After I resigned the company went into liquidation (suprise suprise) owing
me and a lot of other people lots of money. All was lost including my
shares (one director/investor took all the assets as he had a debenture). I
since discovered that an agreement to sell the companies assets to another
company had been signed a few weeks BEFORE the liquidation and the other
directors re-employed by the new company to carry on the business in
another name.

Is that legal? Have I been stitched up? Know any good (cheap) lawyers?
 
R

Rhoy the Bhoy

James said:
I was a director of a company which I resigned from because the
rest of the directors were driving the company rapidly into
insolvency - I put it down to incompetence but....

After I resigned the company went into liquidation (suprise
suprise) owing me and a lot of other people lots of money. All was
lost including my shares (one director/investor took all the assets
as he had a debenture). I since discovered that an agreement to
sell the companies assets to another company had been signed a few
weeks BEFORE the liquidation and the other directors re-employed by
the new company to carry on the business in another name.

Is that legal? Have I been stitched up? Know any good (cheap)
lawyers?
No (probably), yes (probably) and no.

(uk.legal added)
 
S

Steve Maudsley

Rhoy the Bhoy said:
No (probably), yes (probably) and no.
Would it be worth talking to the DTi? I suspect the test of legality is
whether the assets were sold at a fair market price.

IANAL

Stephen
 
J

Johnjo

Steve Maudsley said:
Would it be worth talking to the DTi? I suspect the test of legality is
whether the assets were sold at a fair market price.
That's one half of the equation. The other half is what they did with the
proceeds of sale of the assets.
 
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outcome of your shareholdings

My family are in the same position. How did you get on? Any advice about the routes you tried? Are there any good cobtacts or websites you recommend?

this is known as tunneling and its legal apparently i cannot believe. This can happen.

Hope to read you reply it will be much appreciated, many thanks

I was a director of a company which I resigned from because the rest of the
directors were driving the company rapidly into insolvency - I put it down
to incompetence but....

After I resigned the company went into liquidation (suprise suprise) owing
me and a lot of other people lots of money. All was lost including my
shares (one director/investor took all the assets as he had a debenture). I
since discovered that an agreement to sell the companies assets to another
company had been signed a few weeks BEFORE the liquidation and the other
directors re-employed by the new company to carry on the business in
another name.

Is that legal? Have I been stitched up? Know any good (cheap) lawyers?
 
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