Client money must be returned to the client in the first place?

[youngken]

Company A loaned £2 million to Company B, and then Company B re-loaned £1.5 million to Company C.

Company B filed Company C into administration. Company A was also placed into administration for some reasons.

Administrator X took over both Company A & Company C.

Administrator X sold the assets belonged to Company C, Company B got £1 million dividends back.

Should Administrator X return the £1 million to Company A in the first place?

 

[Newchodge]

Company A loaned £2 million to Company B, and then Company B re-loaned £1.5 million to Company C.

Company B filed Company C into administration. Company A was also placed into administration for some reasons.

Administrator X took over both Company A & Company C.

Administrator X sold the assets belonged to Company C, Company B got £1 million dividends back.

Should Administrator X return the £1 million to Company A in the first place?

I don't think so. Company B was entitled to £1million and was awarded that amount. Company B owes Company A £2 million and Administrator X should pursue Company B for that £2 million.

 

[Frank the Insurance guy]

This doesn't sound like "Client Money" - it is a loan, which is completely different.

 

[eteb3]

And why are *dividends* returned to B when B made a loan? Unless OP means C paid illegal dividends that were recouped? But the £ isn’t dividends in B’s hands if that’s the case, it’s part-payment of C’s debt.

Only prospect I can see for A is to assert a Quistclose trust over the original loan. It can then be “traced” as far as the shareholders receiving an illegal dividend, afaik

 

[UK Contractor Accountant]

Company B is not in Administration so its up to the Administrator X to pursue repayment of "A"'s loan from Company B.

Until company B is forced into Administration/Liquidation then nothing is going to happen i suspect with regard to repayment of the loan to "A"

 

[UK Contractor Accountant]

And why are *dividends* returned to B when B made a loan

its a distribution made by X following sale of assets.

The same as a Liquidator would do.

 

[eteb3]

Oh yeah, "dividend to creditors". I forgot that was the term. Thanks.

 

[numbersrule]

Company A loaned £2 million to Company B, and then Company B re-loaned £1.5 million to Company C.

Company B filed Company C into administration. Company A was also placed into administration for some reasons.

Administrator X took over both Company A & Company C.

Administrator X sold the assets belonged to Company C, Company B got £1 million dividends back.

Should Administrator X return the £1 million to Company A in the first place?

Hi youngken

There seems to be a disconnect between the title of the thread and the content of your post.

Please clarify if Company A used Client Money to make the loan and this lead to the 'other reasons'.

Also, please advise if any of A, B or C have common ownership by any person (s).

 

[youngken]

Company A, B & C had the same sole director, and the same administrator, X, handle the case of Company A & C.

Company A & Company C were SPV property developers and the funds were raised by the investors.

Anyone can give me a legal response?

Thanks

 

[Newchodge]

Company A, B & C had the same sole director, and the same administrator, X, handle the case of Company A & C.

Company A & Company C were SPV property developers and the funds were raised by the investors.

Anyone can give me a legal response?

Thanks

A lawyer. But you will have to pay for it.

 

[fisicx]

@youngken - @Newchodge is correct, you need to engage a decent commercial lawyer to sort this one out. I suspect it’s going to get very complicated and expensive to unravel everything.

 

[Lisa Thomas]

Company A loaned £2 million to Company B, and then Company B re-loaned £1.5 million to Company C.

Company B filed Company C into administration. Company A was also placed into administration for some reasons.

Administrator X took over both Company A & Company C.

Administrator X sold the assets belonged to Company C, Company B got £1 million dividends back.

Should Administrator X return the £1 million to Company A in the first place?

I'm confused. Why would the Administrator of C pay a dividend of £1million back to A? The creditor was Company B according to your post, and they paid B?

 

[youngken]

I'm confused. Why would the Administrator of C pay a dividend of £1million back to A? The creditor was Company B according to your post, and they paid B?

According to the statement of affairs, it said that Company A loaned £2M to Company C.
However, someone discovered that in fact, Company A loaned to Company B for £2M, Company B re-loaned part of it, in the sum of £1.5M to Company C, keeping the rest into his own pocket!
The Administrator might have discovered the misconduct of the accountant who prepared the statement of affairs but the administrator hid the fact.
The Administrator repaid the £1M to Company B right away, and let the future Liquidator to settle.
However, Company B filed the Company into voluntary liquidation after he had received the fund.
Any good advice to get back the fund for the investors of Company A?

 

[fisicx]

Yes. Get a lawyer!

But Company A probably won’t ever get their money back.

 

[Lisa Thomas]

According to the statement of affairs, it said that Company A loaned £2M to Company C.
However, someone discovered that in fact, Company A loaned to Company B for £2M, Company B re-loaned part of it, in the sum of £1.5M to Company C, keeping the rest into his own pocket!
The Administrator might have discovered the misconduct of the accountant who prepared the statement of affairs but the administrator hid the fact.
The Administrator repaid the £1M to Company B right away, and let the future Liquidator to settle.
However, Company B filed the Company into voluntary liquidation after he had received the fund.
Any good advice to get back the fund for the investors of Company A?

Who is the 'someone'? The SOA is just the director's estimate, if the Administrator subsequently discovered that B was the actual rightful creditor then it sounds like they paid the correct party?

 

[ethical PR]

Company A loaned £2 million to Company B, and then Company B re-loaned £1.5 million to Company C.

Company B filed Company C into administration. Company A was also placed into administration for some reasons.

Administrator X took over both Company A & Company C.

Administrator X sold the assets belonged to Company C, Company B got £1 million dividends back.

Should Administrator X return the £1 million to Company A in the first place?

Homework?,

 

[youngken]

Who is the 'someone'? The SOA is just the director's estimate, if the Administrator subsequently discovered that B was the actual rightful creditor then it sounds like they paid the correct party?

Someone is a creditor of Company A.
Company A, & C hired the same accountant, SOA of Company A & Company C were submitted by the accountant in order to file both companies into administration.
Even though Company B was the actual rightful creditor, but her money had been actually come from Company A. If the Administrator had known this fact, should the Administrator retain the dividend of Company B until everything is fully clarified.
Was it a money laundering case?

 

[fisicx]

Only a lawyer can answer your questions once they have reviewed all the documents.

It’s not money laundering. It might be fraud but it might just be unethical actions.

 

[Lisa Thomas]

Someone is a creditor of Company A.
Company A, & C hired the same accountant, SOA of Company A & Company C were submitted by the accountant in order to file both companies into administration.
Even though Company B was the actual rightful creditor, but her money had been actually come from Company A. If the Administrator had known this fact, should the Administrator retain the dividend of Company B until everything is fully clarified.
Was it a money laundering case?

I suspect the Administrator will have done their due diligence before paying out a dividend of that sum.

 

[Newchodge]

Someone is a creditor of Company A.
Company A, & C hired the same accountant, SOA of Company A & Company C were submitted by the accountant in order to file both companies into administration.
Even though Company B was the actual rightful creditor, but her money had been actually come from Company A. If the Administrator had known this fact, should the Administrator retain the dividend of Company B until everything is fully clarified.
Was it a money laundering case?

Company B was not in Administration. Company B made the loan. The source of the money used by Company B to make the loan is irrelevant for the Administrator.

Company A, B & C had the same sole director, and the same administrator, X, handle the case of Company A & C.

Company A & Company C were SPV property developers and the funds were raised by the investors.

Anyone can give me a legal response?

Thanks

Was their common ownership? Directors are not, necessarily, owners.

 

[youngken]

Company B was not in Administration. Company B made the loan. The source of the money used by Company B to make the loan is irrelevant for the Administrator.

Was their common ownership? Directors are not, necessarily, owners.

Yes, the same sole director.
Furthermore, the "loan" from Company A to Company B was supposed an embezzlement.

 

[fisicx]

Yes, the same sole director.
Furthermore, the "loan" from Company A to Company B was supposed an embezzlement.

Have you engaged a lawyer yet? Until you do this won’t get resolved.