Company dead - can we be personally sued.

Discussion in 'General Business Forum' started by aramintaalice, Jan 9, 2019.

  1. aramintaalice

    aramintaalice UKBF Newcomer Free Member

    4 1
    My husband is the director of a company that was heavily ripped of by a much larger well known company. We tried unsuccessfully to fight them for our money. We managed to pay all staff out of personal funds and pay most company debts off however, there is still 1 company left that we owe just under £3k to. We have been trying to pay (out of personal funds and from a personal bank account in case it's relevant) a small amount each month. So far around £150 for about 6 months. 3k is still outstanding.

    We've explained the situation and offered to keep going with the £150 But they've now said enough is enough and they're taking us to court.

    The problem is this, the company will be wound up but we're delaying it while the tax returns are being completed in the hope that some tax money may be recovered (we could then pay the debt) but it's possible we'll owe taxes.

    The other firm has now said they'll come after my husband personally for the money which is terrifying as we used almost all our money up paying staff. The little we have left us just helping us to recover, pay rent etc.

    My question is this, if the company is open or closed can this firm come after my husband personally? Ours is a limited company but the invoices are addressed to the limited company but with my husband's name on it as director. So for example, Mr A N Other, Broke Company Limited.

    The company will be closed after the tax return and has no assets at all.

    Can they come after him personally because we've made subsequent payments from our personal account? Or because the invoice had his name on it, although this was as director of the limited company and the other company state our company name on the invoices.

    Please note, we are not trying to dodge our responsibilities and are only in this position as we were knocked for around £45k by someone much bigger.

    Thank you very much.
     
    Posted: Jan 9, 2019 By: aramintaalice Member since: Aug 13, 2012
    #1
  2. The Byre

    The Byre UKBF Ace Free Member

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    That largely depends on whether he signed a contract that included a personal guarantee.
     
    Posted: Jan 9, 2019 By: The Byre Member since: Aug 13, 2013
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  3. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    Unless you notified the other party before you started making the payments to them from a personal account that the payments were being made on a without prejudice/ex gratia basis then they may well have cause to assume you had acquired the obligation from the limited company.

    You will need to rebuff their claim right now before it escalates.
     
    Posted: Jan 9, 2019 By: Blaby Loyal Member since: Jun 12, 2018
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  4. aramintaalice

    aramintaalice UKBF Newcomer Free Member

    4 1
    Hello, thank you for your reply.

    No he didn't sign anything like that, at the time we had no reason to believe we'd have the slightest problem as we we involved with the large company who eventually knocked us for £45k.
     
    Posted: Jan 9, 2019 By: aramintaalice Member since: Aug 13, 2012
    #4
  5. aramintaalice

    aramintaalice UKBF Newcomer Free Member

    4 1
    Thank you for your reply Blaby.

    How would we rebuff this please?

    We made the payments from the personal account hoping to resolve the debt, it didn't occur to us that this could make us liable personally.
     
    Posted: Jan 9, 2019 By: aramintaalice Member since: Aug 13, 2012
    #5
  6. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    Remind them that the contract was between the creditor and the limited company and provide evidence (e.g. a couple of invoices that make up the debt) and that any enforcement must be taken against the limited company.

    If there is no personal guarantee to the creditor then tell them that the payments were made on an ex gratia basis only and there is and was never any intention for the obligation to pay to be transferred/assigned or whatever from the limited company to your husband.

    Before you do that make sure there isn't anything to the contrary they can come back at you with!
     
    Posted: Jan 9, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #6
  7. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

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    It's highly unlikely that anyone can pursue the directors personally unless there was any fraud involved which from what you have said isn't the case
     
    Posted: Jan 9, 2019 By: Ian J Member since: Nov 6, 2004
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  8. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

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    Personally I would just give them a two word reply with the second word being "off"

    It's a fairly common trick for creditors of an insolvent company to try and threaten the directors in the hope that some of them are daft enough to pay up.

    The only realistic and legal option for the creditor for a debt that small is the County Court and any summons is easily defended if the summons is in the name of the individual and not the limited company
     
    Posted: Jan 9, 2019 By: Ian J Member since: Nov 6, 2004
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    I don't know whether what you have done could be seen as preferring all other creditors except this one.

    Unless the creditor winds your business up its not going to be looked at however. Chances of that, unless on a matter of principle, probably tiny to none.
     
    Posted: Jan 9, 2019 By: Mr D Member since: Feb 12, 2017
    #9
  10. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

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    You will be probably be OK but it looks like you have made a big mistake trying to pay off the companies debts when the company is insolvent .
    If you looked for and followed the appropriate advice in the beginning you would not be running out of your own personal money now .
    Non of this by the looks of it is your fault and you were not legally liable for the debts
    In my view it looks like you have done you and your families personal wealth up like a kipper !
     
    Posted: Jan 9, 2019 By: JEREMY HAWKE Member since: Mar 4, 2008
    #10
  11. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Not if they have been using their own funds to make the payments.
     
    Posted: Jan 9, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #11
  12. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I agree its a shame you didn't get proper advice at the time. You could have tried to dissolve the Company or use some of your money to Liquidate the Company properly.

    Hopefully you can get this resolved and in time the Company will either be liquidated by the creditor or dissolved by Companies House.


    You could try the dissolution procedure yourself but suspect the creditor might object just as a buggeration factor.

    https://www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration
     
    Posted: Jan 9, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #12
  13. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    Mate - that's an answer to a question the OP hasn't asked. The question is in relation to a claimed personal liability to a creditor for a company debt.

    I'm not even going to ask what a "buggeration factor" is :eek:
     
    Posted: Jan 9, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #13
  14. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    It's a technical term!
     
    Posted: Jan 9, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #14
  15. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

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    But this only applies to insolvent sheep farmers
     
    Posted: Jan 9, 2019 By: JEREMY HAWKE Member since: Mar 4, 2008
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  16. Gavin @ Eooro

    Gavin @ Eooro UKBF Contributor Full Member

    33 4
    If there were no personal guarantees given and there was no fraud, criminal acts etc...then its very unlikely they can come after your husband for the money.

    One thing from your post, when you say "personal account"... i am assuming your not paying the money directly from this account to the creditors? ... as you should be putting this into your company as a directors loan and therefore claiming the personal capital loss if/when the company does close.

    Sounds like you need some professional help and advice, your accountant should be able to help or point you in the right direction.

    good luck.
     
    Posted: Jan 11, 2019 By: Gavin @ Eooro Member since: Nov 14, 2017
    #16
  17. aramintaalice

    aramintaalice UKBF Newcomer Free Member

    4 1
    I just wanted to thank everyone who replied very much indeed. We offered to keep paying £150 a month but the company rejected that and has issued a summons in our company name. Hopefully, this will lead to the end of the matter, as the company has no assets at all. Thank you all again.
     
    Posted: Feb 20, 2019 By: aramintaalice Member since: Aug 13, 2012
    #17
  18. Blaby Loyal

    Blaby Loyal UKBF Ace Full Member

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    Sounds very much like a bit of a result there then. Thank you for posting an update.
     
    Posted: Feb 20, 2019 By: Blaby Loyal Member since: Jun 12, 2018
    #18