illegal dividens letter from solicitor

[hillway]

Hi there , got an issue if someone could advise -
I went to a liquidation company to wind up my ltd company in 2009 I was sole director and was an IT service company - just myself as the director / employee - I hit hard times both with the company not getting any work and personally.

I have recieved the following letter today from a solicitor in regards to the liquidation.


Preference payments in the sum of £17,000

We are instructed that you were repaid the credit balance on your director’s loan account of £17,000 within a relevant time
as provided for in Section 240 of the Insolvency Act 1986 at a time that the Company was insolvent and accordingly it is apparent that you
have received a preference payment within the meaning of Section 239 of the Insolvency Act 1986.
There is a presumption that the requisite desire to prefer existed given that you are a person connected with the LTD Company.
Accordingly, our client seeks your immediate proposals for repayment of the sum of £17,000 within 7 days of the date of this
letter failing which we may be instructed to issue proceedings on behalf of the Liquidator for recovery of this sum together with interest and costs.

Unlawful dividends

We are instructed that in the years 2008 up to the date of liquidation total dividends were declared in the sum of £166,000.
It is clear on analysis of the Company’s accounts that there were insufficient distributable reserves to render such dividends as lawful.

Unlawful dividens.

Accordingly, the Company has a claim against you for having authorised and received the unlawful distributions and such sums fall to be repaid to the Company.
Accordingly, as above we request your immediate proposals for repayment of the sum of £166,000 within 7 days of the date of this letter failing which we anticipate
being instructed to instigate proceedings for recovery of this sum together with interest and costs thereon. We trust the above will not be necessary and
look forward to hearing from you as a matter of urgency.

Yours faithfully

Solicitor X ( acting on behalf of the mr x liquidator of the company )

Basically I need help if anyone can advise me Urgently as i need to respond.
I havent got 166,000 and need some advise fast....

 

[hillway]

Hello UKBF community.
I had a small one-man IT consultancy that was initially doing very well, but due to a lack of work I became unable to pay my tax liabilities. corp tax
I sought advice from a company who deals with this sort of thing (mancheser based ) who advised the best course of action was let them they were going to liquidate the company.
I needed the money as had no work so had an overdrawn directors loan of around 30 k on the last year and didnt complete the final year accounts ( advised not needed 2 by this company)
Somewhat drastic but I co-operated fully and was completely open about all the financial affairs of the company.
Now, out of the blue and two years later, I have received correspondence from a solicitor who advise me that I am going to pursued for 'illegal dividends' taken from the company.
This was the first I had ever heard the term.
Anyway, to cut a long story short, this solicitor and the liquidator are going to make my family homeless; an interest amounting to £166,000 which we obviously do not have.
I have now read the rules regarding illegal dividends, and I think I understand them, but I was completely unaware of them until now.
This has resulted even though I was completely open and honest with HMRC about the company's affairs.
Also, the liquidator has effectively sat on this for two yearsi

This year I have had to go though a seperation; have a split home for the 2 kids I am suffering from depression and psychological issues as a result,

In short, my family have had a truly appalling year, and now this has arrived.

will this force me into personal bankruptcy if I don't pay up ?

Also, the traditional litigation tactic of ensuring that mail arrives with us on Saturday morning so that we panic over the weekend.
I feel that the company i went to to seek advise should have advised me better or NOT liquidated the company - should of adised of directors loans etc
I would never do anything illegal.
Any advice would be very much appreciated.

 

[Paul_Rosser]

Is this a different company to the one in this thread - http://www.ukbusinessforums.co.uk/forums/showthread.php?t=217930 ?

In any case if you took money out from the company in the form of dividends and there was not enough profit to cover these then they would be classed as illegal, however I would have thought the company who dealt with the liquidation should have checked this.

Hopefully Alan will be along soon to provide some words of wisdom.

 

[hillway]

yes its the same company - I choose the route of getting an company who deals specially with this sort of thing to sort it out - that way not having this hanging over me... but as you can see I now have this .

not sure how - I stand now .

 

[Paul_Rosser]

Oh right, was a bit confused as you mention that you had the company in question liquidated in 2009, but the other post was from 2011.

Have you gone back to the company which performed the liquidation to ask them for advice ? I would have thought they should have spotted any illegal dividends, an overdrawn DLA etc. as part of their process.

 

[hillway]

sorry Paul agreed its 2011 not 2009.- as per that previous post -

the strange thing the company I went to - Is also the company IP that has sent the solicitors letter ??? as per above.

 

[Paul_Rosser]

Oh right, sorry I thought it was from a creditor.

Bit weird they have waited 2 years to get in touch to ask you for repayment.

You really need some proper advice from someone like Alan Price, so best you wait and hopefully he, or someone more qualified than me will be along soon.

 

[hillway]

i think I need some professional advice here , does anyone know of anyone I can call / contact to discuss this.

Many thanks.

 

[Paul_Rosser]

I'll PM someone who should be able to assist, but they may not reply until tomorrow.

 

[hillway]

thanks Paul for reply.

 

[Alan R Price]

hillway

You will not be able to get proper answers on a forum like this, particularly in view of the size of the figures (which I think are probably overstated). I'd be happy to have an informal chat free of charge, to discuss your options, if you will PM me a phone number.

 

[Paul_Rosser]

Thank you Alan.

i think I need some professional advice here , does anyone know of anyone I can call / contact to discuss this.

Many thanks.

Alan has kindly offered to speak with you and as he's an expert of this kind of thing personally I would bite his hand off.

 

[hillway]

Hi Alan , Thanks just PM'd you my no .