Domain name "sold" before liquidation

[cica]

Hi all ,

I will be seeking legal advice next week but I would appreciate if anyone had any comments/thoughts on this situation in general.

These situations are often complex so it surely makes more sense to give a general overview of the situation and see if there are any general comments before I seek legal advice on Monday.

I spotted a eCommerce website ceased trading last year. Slightly odd since I know the sector is healthy if you know what you're doing. They'd obviously got themselves into a lot of bother racking up various debts with suppliers and banks (~£200,000). I could see on Companies House the owner trying to get the company struck off but the debtors not letting him.

As I'm sure a lot of you know a domain name that ranks highly for a particular retail sector is a substantial asset and it definitely is in this case.

Long story short, I contacted the company to show my interest. Had no joy whatsoever until making contact with their developer who told me the domain had been sold. Sure enough the website was trading again under a new company registered in the same town but different directors.

The company had now been assigned liquidators.

Now I'm really suspicious of the situation the domain name was "sold". I would love to put an offer on it and I'm sure the value of it to me would go a long way to paying off the debts yet it doesn't seem to be an asset any more even though it's key.

Will the liquidators be interested in me contacting them? I feel a little annoyed I didn't get the chance to buy it even though it seems that what should have happened considering this company has serious debts.

Thanks!

 

[MASSEY]

What will the sale of that domain have to do with you? do you know what the funds that came from the sale were used for? The domain name will have been an intangible asset as far as im aware. They could have sold the domain for 99 pence if they wanted to. Things are only worth what someone else is willing to pay.

To cut the story short you will be wasting your time and the people who you try to get in touch with.

 

[cica]

What will the sale of that domain have to do with you?

Absolutely nothing directly although, as I understand it, those with unpaid debts are interested in the market for assets to recoup losses.

Nothing personally although the public are specifically informed of this process.

do you know what the funds that came from the sale were used for?

No idea which is really what my question was about.

The domain name will have been an intangible asset as far as im aware. They could have sold the domain for 99 pence if they wanted to. Things are only worth what someone else is willing to pay.

I'm not so sure they could sell it for 99p and it be completely ignored. My understanding is that part of a liquidator's duty is to investigate where valuble assets ended up and placing assets out of reach etc.

To cut the story short you will be wasting your time and the people who you try to get in touch with.

Thanks for your help. I'll not bother.

 

[MASSEY]

"I'm not so sure they could sell it for 99p and it be completely ignored. My understanding is that part of a liquidator's duty is to investigate where valuble assets ended up and placing assets out of reach etc."


I would imagine they could have. I'm not so sure how they would ascertain or be able to detail value of a search engine placement. Also directors make bad decisions all the time, if they had no shareholders they would have no one to answer to. This is the thing with ltd companies anyone who is willing to lend them money takes a risk.

 

[cica]

"I'm not so sure they could sell it for 99p and it be completely ignored. My understanding is that part of a liquidator's duty is to investigate where valuble assets ended up and placing assets out of reach etc."


I would imagine they could have. I'm not so sure how they would ascertain or be able to detail value of a search engine placement. Also directors make bad decisions all the time, if they had no shareholders they would have no one to answer to. This is the thing with ltd companies anyone who is willing to lend them money takes a risk.

Value is usually accurately obtained in a market i.e. what someone is willing to pay, as you said above. Indeed this is a liquidator's job, to arrange the market.

Limited companies are answerable to their creditors as is practiced in liquidation.

Perhaps it was sold for £50,000 and creditors partially paid. I do not know. I thought it might be sensible to find out. I will take your advice, thanks.

 

[JohnnyCash]

What will the sale of that domain have to do with you? do you know what the funds that came from the sale were used for? The domain name will have been an intangible asset as far as im aware. They could have sold the domain for 99 pence if they wanted to. Things are only worth what someone else is willing to pay.

Thats not true at all. They need to act in the best interests of the company, and offloading a valuable asset to another company (even if they own the other company) is definitely not in the best interests of the first one.

In extreme cases of undervaluing things the transaction could be forcibly reversed. Then you could look at bidding on it yourself and they would have to consider your offer...

No idea how you go about any of that though.

 

[bdw]

If I were you I would contact the liquidators and explain the situation to them. There would be no harm in that.

.

 

[MrMichael]

A transaction at an undervalue could potentially have taken place so you should contact the liquidator as they have a duty to act in the best interests of the creditors of the company and to realise the assets of the company to this end.

Where the parties are connected, it is even more important to ensure that fair value has been paid for assets.

 

[Spongebob]

Do you know that the domain name was ever actually owned by the company? I own all my companies' domain names personally and rent them to the companies.

I believe that this is common practice.

 

[cica]

Do you know that the domain name was ever actually owned by the company? I own all my companies' domain names personally and rent them to the companies.

I believe that this is common practice.

Good question, not sure. I can definitely understand that but I didn't know it was such purposeful common practice.

Is this absolutely watertight legally? Seems like a nice loophole in limited liability Internet companies as the domain name is often a substantial part of the business.

Thanks, very informative.

 

[cica]

Do you know that the domain name was ever actually owned by the company? I own all my companies' domain names personally and rent them to the companies.

I believe that this is common practice.

I think that you're probably right, that this is what they have done. I can just about imagine this not being 100% watertight though (not that it probably matters in this case).

If the domain name is a trademark of the company then the liquidators could reclaim ownership. I've seen it happen where Nominet does act in favour of the brand owner rather than registrant which would be the liquidators.

But I admit that's probably a little around the houses in this case. Thanks

 

[MASSEY]

Thats not true at all. They need to act in the best interests of the company,

No, the best interest of the shareholder but since it is an item that cannot be valued my original statement still very much stands

 

[cica]

No, the best interest of the shareholder but since it is an item that cannot be valued my original statement still very much stands

Best interests of the creditors when in liquidation actually.

Of course it can be valued. Just one method off the top of my head: sedo.com is a domain auction.

That's just one way, another would be to entertain people that contact them like me and see what value I attribute to it. In this case, easily £15k+ and perhaps a lot more.

Liquidators are very aware that rivals are good markets to contact to find value too.

 

[MASSEY]

Best interests of the creditors when in liquidation actually.

It was sold befiore they got in the door though wasn't it?. The domain is only worth what someone is willing to pay.

You will waste your time trying to pin the director. He could very well say the website was making no money? it was not converting enough customers? The domain disappeared from google and i thought it was banned so i sold it for a fiver to someone i met in a pub?

Does this guy owe you money or something

 

[cica]

It was sold befiore they got in the door though wasn't it?. The domain is only worth what someone is willing to pay.

You will waste your time trying to pin the director. He could very well say the website was making no money? it was not converting enough customers? The domain disappeared from google and i thought it was banned so i sold it for a fiver to someone i met in a pub?

Does this guy owe you money or something

Liquidators can (not necessarily often exercised) have retrospective powers if you look at the law.

I'm not trying to pin anything on the director or anything. If you go back to my original question you'll see it's a general inquiry about a specific situation. Some have given different answers to you that liquidators actually may be interested in hearing from people as it is their job.

A domain is only worth what people are willing to pay - this is the same for anything and everything.

Thanks for all your answers.

 

[MASSEY]

They are not as clued up as me, i'm an expert at telling if something is a waste of time or not . Good luck anyway.

 

[cica]

They are not as clued up as me, i'm an expert at telling if something is a waste of time or not . Good luck anyway.

Thanks, I actually said I was taking your advice earlier in the thread. The rest has been about disproving your statements.

 

[MASSEY]

What you have gathered from this thread is how frustrating the lack of enforcable regulation there is for small ltd companies who take the piss and rip people off. Nothing you can do though really.

 

[Alan R Price]

Will the liquidators be interested in me contacting them? I feel a little annoyed I didn't get the chance to buy it even though it seems that what should have happened considering this company has serious debts.

Speaking as an IP I can say the liquidator will probably welcome your contacting him if the company has any assets you want to acquire.