Can a company entering Voluntary Liquidation continue to use a brand image and their sales outlets?

Discussion in 'Insolvency' started by mhlayf1, Mar 30, 2020.

  1. mhlayf1

    mhlayf1 UKBF Newcomer Free Member

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    Hey everyone!
    My business is an official creditor to a company that has been declared insolvent and is entering into voluntary liquidation. I won a judgement from the court for the money owed and since obtaining the judgement the company contacted me to say they had appointed a business recovery consultant to assess the business and it may be very likely that after assessment if the business had no clear way back to recovery would look to liquidate.

    The consultant has now finalised his assessment stating that there was too much pressure from creditors and many were not willing to offer viable credit terms that liquidation is the confirmed route. An ultimate debt of £500k to various creditors required too much of a bail out cash injection.

    The insolvency practitioner has been appointed and I am awaiting paperwork on a creditors meeting. It has been insisted that there is no money available to me and no assets as they have all been sold.

    The company name of this business is identical to the the brand name they are associated with by the public except for the Ltd at the end of the registered company. They have hundreds of thousands of social media followers and I am guessing the same in email newsletter subscribers.

    However, even after being told that no assets were available as all had been sold (this was by a business recovery firm) the brand's website/store is still live appearing to be making stock still available for sale including the stock that we never got paid for and ultimately received court judgement over, along with a whole bunch of other stock. They are still posting on their social media outlets even announcing that they will be looking forward to new products, working with new suppliers and everything will be back in full swing from this week.

    When questioning this recovery consultant who is our point of contact for all this, he said that the company never owned the brand along with its branding and that it was only being licensed by the company. Quote below:

    "It comes down to the ownership of the ‘brand’ which, per my instructions’, is not owned (and has never been owned) by ...................

    ...................... Ltd simply licensed the use of the brand - from the brand owner - until such time as it ceased to trade. Without the brand, nobody can sell the products, unless they obtain a license or remove any branding (the cost of which would outweigh the value). The value of the stock is only unlocked with the brand."

    Anyway, not really sure what that means or what the commercial law is behind being in liquidation and continuing to use the brand outlets (as mentioned the brand name is identical to the company name) to pedal products and future business.

    One thing seems for sure, Ive lost all the money owed as a creditor as a result of liquidation....but its still frustrating that assets are being sold in one form or another when that money could be going to creditors. It doesn't seem fair that they can take advantage of their massive brand following to boost revenue on products under the same branding even if any trades aren't being officially done by the company.

    Does anyone have any advice on what should and could be done about this? I could probably then argue it at the creditors meeting.

    Appreciate it! Thanks so much :)
     
    Posted: Mar 30, 2020 By: mhlayf1 Member since: Jan 6, 2019
    #1
  2. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I think you have already had your answer as you have been advised that the brand does not belong to the Limited company that is being Liquidated.
     
    Posted: Mar 30, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #2
  3. mhlayf1

    mhlayf1 UKBF Newcomer Free Member

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    Hey Lisa,
    Thanks for the reply. Right, I do understand that but the brand is pretty synonymous with the company. All the products the company sell have been bought by the company and those products are made saleable by applying the branding. It's the companies money made from products they have sold to market the brand and gain that kind of following/customer base.

    If the director starts up a new company with a different name but continues to do the same thing using the same outlets is that not giving him a boost to continue future business doing the same thing?

    If say Nike Ltd only sold products branded Nike and then Nike went into liquidation can they continue selling Nike branded products with the same director but a different company name?

    Seems a bit shammy

    Thanks :)
     
    Posted: Mar 30, 2020 By: mhlayf1 Member since: Jan 6, 2019
    #3
  4. Stedurham

    Stedurham UKBF Regular Free Member

    434 61
    If your products haven’t been paid for your terms
    Should state you still own them, take invoices and get your stock
     
    Posted: Mar 30, 2020 By: Stedurham Member since: May 11, 2018
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    22,064 2,593
    Basically yes - your Nike example would be a different legal entity, the director would not matter it would be a different company.
    Been to Clintons (the card shop) since early December? New owners. The same as the old owners. Similar to what you are seeing (apologies if it is Clintons)?
     
    Posted: Mar 30, 2020 By: Mr D Member since: Feb 12, 2017
    #5
  6. mhlayf1

    mhlayf1 UKBF Newcomer Free Member

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    Hey there, thanks for the reply. Just realised the Nike example isn't a great one and could be mis-interpreted.

    Thanks
     
    Posted: Mar 30, 2020 By: mhlayf1 Member since: Jan 6, 2019
    #6
  7. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,486 436
    If the Company in Liquidation owns any assets the Liquidator can sell those assets to another entity, which could be another entity owned by the same people as before (known as a Phoenix).
     
    Posted: Mar 31, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #7
  8. mhlayf1

    mhlayf1 UKBF Newcomer Free Member

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    ....and phoenix companies are bad right? as in its naughty? ha
     
    Posted: Mar 31, 2020 By: mhlayf1 Member since: Jan 6, 2019
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    No.
     
    Posted: Mar 31, 2020 By: Mr D Member since: Feb 12, 2017
    #9
  10. mhlayf1

    mhlayf1 UKBF Newcomer Free Member

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    Cant post links yet but from reading phoenixing sounds pretty naughty to me. Thanks
     
    Posted: Mar 31, 2020 By: mhlayf1 Member since: Jan 6, 2019
    #10
  11. Mr D

    Mr D UKBF Legend Free Member

    22,064 2,593
    It isn't.

    There are issues where certain actions have to be taken but nothing wrong with it. Multiple companies have done it.

    However there is a difference between naughty and illegal.
     
    Posted: Mar 31, 2020 By: Mr D Member since: Feb 12, 2017
    #11
  12. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,486 436
    No it's legal if done in the right way.

    A person can be a director of as many companies as they like as long as they are not disqualified or Bankrupt.

    There are rules in place the make it illegal to use the same or similar name of the old business unless certain exemptions apply.
     
    Posted: Apr 1, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #12