Insolvency question

[chalkycheese]

Hello,
I put my Ltd Co (Company no1) into liquidation in March this year. In the previous October I accepted an offer on one of the 3 cafes we were operating at the time. The set up of this cafe was paid for out of personal funds, the ltd co did not exist at this time. A separate ltd co( No2) was set up for the lease and the lease was sold for £1 and the company struck off. The goodwill /building renovation was repaid to me personally (at a substantial loss).
I have repaid the people who did all the building work with this money.
The liquidation of Company no 1 did not take place until March as we had two potential buyers for one of the other two remaining sites and I hoped that if the sale went ahead we may not need to liquidate but would have been able to come to a payment agreement with creditors and trade out of the problem with the third existing cafe.
The buyers both pulled out and the Co was put into liquidation. The liquidator is asking me what happened to the assets of Co no 2; I had kept quiet about this during my initial meeting as I was unsure about my position.Does anyone have any ideas of what my position is as we were not in liquidation at the time of the sale ? Thanks for reading

 

[SamStones]

I think you're going to have to re phrase / re write your post as I couldn't make any sense of it sorry.

 

[chalkycheese]

Thanks for reading it; I will re work it . The whole situation was very complicated !

 

[northernant]

Hi, I'm not sure I follow you completely but I think I understand parts of it. So the Liquidator is now asking what has happened to the assets of the company is this correct?

What they will be looking for is an legitimate audit trail. If the assets were sold off to another company there should be an invoice and the next question would be where the money from the transaction has gone...

Although the company was not in liquidation at this point I suspect that it was still Insolvent? Is it possible for you to explain what happened to these assets?

 

[Alan R Price]

Hello,
I put my Ltd Co (Company no1) into liquidation in March this year. In the previous October I accepted an offer on one of the 3 cafes we were operating at the time. The set up of this cafe was paid for out of personal funds, the ltd co did not exist at this time. A separate ltd co( No2) was set up for the lease and the lease was sold for £1 and the company struck off. The goodwill /building renovation was repaid to me personally (at a substantial loss).
I have repaid the people who did all the building work with this money.
The liquidation of Company no 1 did not take place until March as we had two potential buyers for one of the other two remaining sites and I hoped that if the sale went ahead we may not need to liquidate but would have been able to come to a payment agreement with creditors and trade out of the problem with the third existing cafe.
The buyers both pulled out and the Co was put into liquidation. The liquidator is asking me what happened to the assets of Co no 2; I had kept quiet about this during my initial meeting as I was unsure about my position.Does anyone have any ideas of what my position is as we were not in liquidation at the time of the sale ? Thanks for reading

I am a licensed insolvency practitioner.

The liquidator is entitled to ask the question about the proceeds of sale of company 1's assets and you must answer him or potentially you could end up in hot water. As regards the sale in October, if the company owned the café in question and its contents (this will be evidenced in the company's previous accounts and other documentation), then the proceeds of sale belonged to it.

He will want to know why you paid off the builders, as opposed to any of the company's other creditors at the time. He will be trying to establish if you deliberately preferred anybody because if you did, he might be able to pursue them for the return of the money as a preference under s 239 of the Insolvency Act 1986. If you paid yourself anything out of the company's funds you might well be liable to repay it.

On the face of it, company number 2 is nothing to do with him. He is not its liquidator so he is not entitled to know what has happened to its assets unless company 1 was a shareholder, in which case he has the same rights as company 1 to request information. That said, if it had no significant assets and the situation is as you described, I cannot see any reason why you should not tell him.