In Liquidation but still trading

[Mystro]

I was under the Impression that if a company is in liquidation then then that company must cease trading

We have a company that we did some work for In September 2023 and the said company did not pay their bill, they came up with excuse after excuse, so we took them to the small claims court, They are using a new name but T/A the old name, they have put in a counter claim for time spent saying they equipment was not fit for purpose .... however they have used the new name of the company and the old company name that is in liquidation on the judgment form, this form was filed in June 2024 7 months after going into liquidation

This company that is in liquidation owes close on to 500k to 5 previous suppliers and banks and such and is also racking up CCJ;s to the total of 53k on top of everything else

We do expect to win our case but we know we are not going to get our money due to the large amount of debt he owes but what can we do, our hearing has been adjourned for 4 weeks

Its totally wrong that a company can do this and morally wrong for someone to do this to other businesses, we are lucky as in comparasm to some of the other company's our figure is not going to jeopardies our business

Whats the best action to flag this so the owner is liable for something or is this just how the law works

Thanks

 

[Gyumri]

The best action to recover your money is to sue the director/owner of the company personally for your money on the basis that he is using his Ltd as an instrument of fraud.

As you only sued his company it may now be too late for that option.

 

[ChrisCallaghan]

Hi @Mystro ,

The short answer is that you should put your questions to the appointed liquidator. You should be able to find out who that is via Companies House.

The longer answer is that they are several allowable scenarios that could be at play here.

They are using a new name but T/A the old name

Can you be more specific? Do you mean that they are trading under a new limited company, and using the old trading name? If so, so long as this has been done correctly, this can be allowable. Potentially the new company will have bought the assets and goodwill from the liquidator, and then obtained permission to re-use the old company name - see section 4 at https://www.gov.uk/government/publications/re-use-of-company-names/re-use-of-company-names.

The best action to recover your money is to sue the director/owner of the company personally for your money on the basis that he is using his Ltd as an instrument of fraud.

I'd have to advise against this until the facts have been established. Falsely accusing someone of fraud will have serious implications.

Firstly check with the appointed liquidator. If it transpires that the new company is wrongly trading or using a prohibited name, you should then contact the Insolvency Service - see section 8 of the earlier provided link.

 

[ChrisCallaghan]

PS: If after further research (speaking to the appointed liquidator and the Insolvency Service) you feel you have actionable claim against the new company, I would then recommend instructing a legal firm to take your claim further - needless to say such claims can be complex, and you would benefit from specialist expertise.

 

[Mystro]

PS: If after further research (speaking to the appointed liquidator and the Insolvency Service) you feel you have actionable claim against the new company, I would then recommend instructing a legal firm to take your claim further - needless to say such claims can be complex, and you would benefit from specialist expertise.

Thanks for the reply Chris

I have gone online and found all the company's he owes money too, but i have not yet spoken to the Liquidator,

We cannot lose our case as its clear cut and nothing wrong, however its a figure that if he did not pay wont affect us and would probably cost us more pursuing than what he owes (Around (£2200) but its the principle and i could not fathom how the judge can even not see the facts in front of him and see all this calculated debt ... I just felt so sorry for one of the other suppliers he knocked and owes over 60k to him individually which may put him out of business

I will make contact with the creditors so many thanks for the advise

 

[ChrisCallaghan]

@Mystro - I completely understand where you are coming from. As suggested, contacting the appointed liquidator, and potential the Insolvency Service, costs nothing and may give you the answers you need.

 

[Mark T Jones]

Thanks for the reply Chris

I have gone online and found all the company's he owes money too, but i have not yet spoken to the Liquidator,

We cannot lose our case as its clear cut and nothing wrong, however its a figure that if he did not pay wont affect us and would probably cost us more pursuing than what he owes (Around (£2200) but its the principle and i could not fathom how the judge can even not see the facts in front of him and see all this calculated debt ... I just felt so sorry for one of the other suppliers he knocked and owes over 60k to him individually which may put him out of business

I will make contact with the creditors so many thanks for the advise

I'll add here, that you are likely to be throwing money (and potentially time) away by pursuing this.

It's a question of absolute principle, then great, pursue it - but be aware that there is always a chance you can lose - however obvious it is on paper or in your mind.

What does a win look like to you? In reality it's likely to take the form of a CCJ - lost amongst many larger CCJs and maybe a nominal payout at the end of the process.

THR - You may be legally & morally in the right, but you are probably p!55ing in the wind.

 

[Lisa Thomas]

If you win a CCJ against the liquidated company it will be worthless I'm afraid.

I agree with Chris - definitely speak to the liquidator.

 

[Elliot Green]

Always be aware of the sobering soundbite that every litigator is likely to have both heard and themselves not doubt issued with assiduous alacrity:
'there is a risk with any piece of litigation'

 

[Kixoponev]

Hey, I get where you're coming from. This situation sounds really messy and unfair. When a company goes into liquidation, they’re generally supposed to stop trading under that name. It seems like they’re trying to dodge their debts by using a new name but still trading as the old one. That's sketchy.

Since they’re in liquidation and have so much debt, it’s unlikely you’ll see your money, even if you win in court. It might be worth reporting this to the liquidators handling the old company. They need to know the owner might be playing dirty. You could also let the court know about this shady business when your hearing comes up.

It's frustrating, but sometimes the system does let these things slide through the cracks. Hang in there, and hopefully, justice will catch up with them.

 

[JEREMY HAWKE]

The best action to recover your money is to sue the director/owner of the company personally for your money on the basis that he is using his Ltd as an instrument of fraud.

As you only sued his company it may now be too late for that option.

Over the years companies have approached me offering a service where they can claim from the director personally for trading insolvently although there have not been many calls recently

Does this actually happen and is it really possible ?

 

[ChrisCallaghan]

Over the years companies have approached me offering a service where they can claim from the director personally for trading insolvently although there have not been many calls recently

Does this actually happen and is it really possible ?

Not in my opinion Jeremy.

If the director has committed any wrongdoing, then it is down to the liquidator and the Insolvency Service to take action, which can including recovery from directors. However, any funds recovered will go towards the liquidators costs, and then distributed to the creditors in the same way as any funds in the liquidation estate, such as from the sale of the company's assets.

Perhaps they themselves work with a preferred insolvency practice, and are looking to get the liquidation work of the originally appointed liquidator. The process of investigating the director's conduct and potential recovery remains the same, just a different IP handling the work.

The above being said, I'll bow to others knowledge if they have more direct experience with companies offering this service.

 

[Lisa Thomas]

Hey, I get where you're coming from. This situation sounds really messy and unfair. When a company goes into liquidation, they’re generally supposed to stop trading under that name. It seems like they’re trying to dodge their debts by using a new name but still trading as the old one. That's sketchy.

Since they’re in liquidation and have so much debt, it’s unlikely you’ll see your money, even if you win in court. It might be worth reporting this to the liquidators handling the old company. They need to know the owner might be playing dirty. You could also let the court know about this shady business when your hearing comes up.

It's frustrating, but sometimes the system does let these things slide through the cracks. Hang in there, and hopefully, justice will catch up with them.

Not necessarily, Kixoponev.

Regardless of having a company enter liquidation, a Director is allowed to be director of as many companies as they like, unless they are bankrupt, or disqualified.

A Director is not allowed to use the same or similar name of a prior company that has entered liquidation in the last 5 years but certain exemptions apply, which includes buying the assets from the company, and giving notice to creditors of their intention to reuse the name.

So it is legal (if done properly) and is quite common. It doesn't necessarily mean the Directors have done anything 'sketchy' or are 'playing dirty.'

More information about reuse of names/Phoenix legislation can be found here:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

 

[Kixoponev]

More information about reuse of names/Phoenix legislation can be found here:

Thank you for this. I'm sorry I'm wrong about a lot of things when I respond in the threads.

 

[Lisa Thomas]

No problem, you just have to take care when giving advice if you're not sure (although if people want to base their decisions on advice taken from strangers on the internet without doing their research that's on them!)

 

[Mystro]

Update

Called the Liquidator and yes in liquidation however they have bought the rights to the name so trading as the original name, not sure how that works , and is totally unfair he has knocked 4 suppliers 2 of which are independent one for 64k and one for 82k both struggled to stay afloat and the fat mug who knocked them called it clever accounting with a smiley face after it ... wrong in all aspects but thats the law for you

But as mentioned our debt is tiny compared , but we are just making it difficult and time consuming for him its a case w cannot lose but saying that the justice system these days is not a given ...

Karma is a great thing and from my conversations from the people who are part of the 500k debt, one of them knows the current company supplying this guy so he pulled his contract and he dont have many options left

not sure how you can owe that amount of money with no recourse and still legally trade

anyhow thanks for the feedback its much appreciated

 

[Lisa Thomas]

Unless they find themselves disqualified, people are allowed to be directors of as many companies as they like, regardless of any insolvencies (although once they have a few under their belt they might find themselves subject to a Joint Liability Notice form HMRC but that's another subject for another day).

Unfortunately from your perspective that's one of the benefits of running a limited company - it's a separate legal entity and the directors are not personally liable for the debts if it enters insolvency (unless they have given personal guarantees or committed misconduct)

What you have described here sounds like they started again with what is known as a phoenix.

It can be perfectly legal if done the right way. It's a bit difficult and lengthy to explain over a forum post but you can find out more in my video here:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

It's not that easy to start again. There are lots of practical hurdles which I have explained in this video:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.

youtu.be

I'll be surprised if the hearing goes ahead given the fact the company has been liquidated but imo it will be a complete waste of your time if you are an unsecured creditor. You will not be causing the director/s any grief as they no longer have any control over the company - the liquidator has now taken over.