Co-director resigned with immediate effect and started new company taking the customers

Discussion in 'Legal' started by l.overs, Aug 3, 2018.

  1. l.overs

    l.overs Guest

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    We have ran a business for 10 years and since a disagreement last year and other issues the co-Director has resigned after I refused his buyout fee and then he refused to attend board meeting to discuss options I had to keep the business moving forward. Resignation was with immediate effect and all shares were relinquished back to myself. The day before he resigned he set up a new company and then 2 weeks down the line has poached the 2 biggest clients we had and this in turn will make my company (his old company ) insolvent because unless I get any new business within the next few months I am unable to run the company on the small .wage I'll be getting. We have been to see a solicitor who has said he has breached his duties ..but I keep reading conflicting stories stating that he can go off and do this . We did not have any agreement in place just the standard articles.
     
    Posted: Aug 3, 2018 By: l.overs Member since: Jan 1, 1970
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  2. obscure

    obscure UKBF Ace Free Member

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    On what basis did your solicitor say that he breached his duties to the company?

    Unless you have some form of contract that prohibits competition I can't see that he has done anything (provably) wrong. - unless, for example, you have evidence that he contacted these clients while he was still a Director, thus damaging the company while still a Director.
     
    Posted: Aug 4, 2018 By: obscure Member since: Jan 18, 2008
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  3. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    You could potentially issue a cease and desist, assuming you had a no poaching clause in your contract

    However, in reality the damage is done - you can’t tell customers who to deal with

    Your business had / has a critical vulnerability in that you were over reliant on 2 customers. Whether it was an ex colleague or a new competitor this was always likely to happen

    Big question, how did he poach then away so easily?
     
    Posted: Aug 4, 2018 By: Mark T Jones Member since: Nov 4, 2015
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  4. l.overs

    l.overs Guest

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    He had contacted the customers before. I have one email of evidence and he set the new company up 2 days before resignation. He wanted x3 more in value for us to buy him out and wanted to give us x1 the value but then to walk away and just give up the shares for free is enough evidence in my eyes that this was all pre arranged whilst he was still a director.

    He also had told the customers about the company situation between us and this has tarnished my relationship with them.
     
    Posted: Aug 4, 2018 By: l.overs Member since: Jan 1, 1970
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  5. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    In an deal world, what outcome would you like?
     
    Posted: Aug 4, 2018 By: Mark T Jones Member since: Nov 4, 2015
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  6. Mr D

    Mr D UKBF Legend Free Member

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    OK so what did he actually do while a director of the company alongside you?

    You've said he created a new company. Is that in itself a problem?

    He told customers - is that after he resigned?
     
    Posted: Aug 4, 2018 By: Mr D Member since: Feb 12, 2017
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  7. l.overs

    l.overs Guest

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    I would like an outcome of some justification in the fact it is blatantly obvious that this has been done behind my back and now will potentially fold the company. Surely the companies house act have provisions/rules for this kind of action. The outcome I would prefer is some sort of compensation. How van it be correct that half my business has been taken. I understand you are free to set up a new company but surely there are regulations?

    Mr D...in answer to your questions he resigned 2 days after setting up a new company but before setting up the company he had been out to the customers to poach them. This is why he was so confident in leaving and then just giving us his shares free of charge after initially wanting us to buy him out for a huge fee. I have an email where he discussed this with one of the big customers. .whom of which is his best friend. ...this has left us with nothing overnight. What doesn't help it is my brother that has done this to me. It has a big effect on the whole family/business.
     
    Posted: Aug 4, 2018 By: l.overs Member since: Jan 1, 1970
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  8. Mr D

    Mr D UKBF Legend Free Member

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    How much do you want to spend taking legal action against your brother?
     
    Posted: Aug 4, 2018 By: Mr D Member since: Feb 12, 2017
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  9. Blaby Loyal

    Blaby Loyal UKBF Regular Free Member

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    You need to start legal action against them. There is no other way. Be prepared to spend at least a couple of thousand pounds and for it to take months. Don't expect to win either.

    Sadly, as another post as referred to, your business was extremely susceptible to this situation arising being so dependent on just two key accounts.

    Probably not what you wanted to hear but this is the stark reality I'm afraid.
     
    Posted: Aug 4, 2018 By: Blaby Loyal Member since: Jun 12, 2018
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  10. Newchodge

    Newchodge UKBF Big Shot Free Member

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    And that was it??? Surely the solicitor went on to recommend what you can or should do?
     
    Posted: Aug 4, 2018 By: Newchodge Member since: Nov 8, 2012
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  11. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    If you want to pursue something through the courses, there are several things you need to do

    - be prepared to spend time and money on it

    - be prepared for la battle and some stress

    - be very clear on what recourse you are seeking - and be able to quantify/justify it

    - be clear on what laws have been broken.

    You brother might have broken laws - from ghe information. Provided it’s impossible to say.

    You or our opinions on whether he should be allowed to do it are irrelevant.
     
    Posted: Aug 4, 2018 By: Mark T Jones Member since: Nov 4, 2015
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  12. l.overs

    l.overs Guest

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    A letter has been sent out to negotiate but has been ignored. I suppose we will have to take the costly route but I will be willing to do this.
     
    Posted: Aug 4, 2018 By: l.overs Member since: Jan 1, 1970
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  13. Mr D

    Mr D UKBF Legend Free Member

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    The cost can be high, including money.

    Up to you though. Just don't expect more than a feeling of revenge.
     
    Posted: Aug 4, 2018 By: Mr D Member since: Feb 12, 2017
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  14. l.overs

    l.overs Guest

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    Its not revenge I'm after it is to protect my family and my livelyhood. I've worked and put my life of 10 years into that company for it all to be taken away by greed. I just can't see the justice in it especially when I know it has been done deliberately! !! Oh well life goes on and the moral of the story don't trust anyone not even your brother because they will drop you in just for the love of money. !!!
     
    Posted: Aug 5, 2018 By: l.overs Member since: Jan 1, 1970
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  15. Mr D

    Mr D UKBF Legend Free Member

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    If you take him to court you won't get your business back. You can spend thousands and not get a penny off him.
    Or spend money and get peanuts. Potentially.


    Unfortunately the forums have plenty of instances where best friends or family members have broken up over something and either mess over the other party or cost them the business.
     
    Posted: Aug 5, 2018 By: Mr D Member since: Feb 12, 2017
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  16. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Does your Company have contracts with your customers? Do they need to give any notice to cancel the contracts?

    I appreciate the way it's happened is not very nice but at the end of the day customers can change their suppliers at any time and often do - this is how business works, you need to be able to react and get sufficient new work in when this happens.

    If you cannot do this then you should seek insolvency advice based on your comments that this will make your Company insolvent.

    Consider why the customers decided that they would leave and chose to work with your brother's Company rather than stay with yours.
     
    Posted: Aug 6, 2018 By: Lisa Thomas Member since: Apr 20, 2015
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  17. fisicx

    fisicx It's Major Clanger! Staff Member

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    It it wasn’t your brother but another new company who poached your clients would you still be considering legal action?

    The customer has gone and ain’t coming back. So even if you do go to court and maybe even win, you will still have to find a new source of income.
     
    Posted: Aug 6, 2018 By: fisicx Member since: Sep 12, 2006
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  18. l.overs

    l.overs Guest

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    @Lisa Thomas the reason the customers have gone is because 1 was his best friend and the other one has gone because my brother has been basically visiting him and building up the relationship behind my back for his own intentions. It is not something I could do a loT about. We do have contracts with the customers but you are fighting a losing battle. In the end the nice guy loses out. We will try and find new customers so fingers crossed it works out.
     
    Posted: Aug 6, 2018 By: l.overs Member since: Jan 1, 1970
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  19. Mr D

    Mr D UKBF Legend Free Member

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    So the best friend was almost certainly going to join your brother regardless.
     
    Posted: Aug 6, 2018 By: Mr D Member since: Feb 12, 2017
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  20. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Best of luck but bearing mind if you cannot fill the gap you should take insolvency advice. You may be technically wrongfully trading at present so keep a good record of all decision being made in case such a claim comes back to bite you personally if you don't trade out of it.
     
    Posted: Aug 6, 2018 By: Lisa Thomas Member since: Apr 20, 2015
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