Insolvency

[Phil B]

I have a friend who is a shareholder (only) in a Private Limited Company and has recently been contacted by the Adminsitrator demanding that he repay £15,000 of dividends received from the company.

Does an administrator have the power to do this? Understand that Directors can be in trouble for wrongly declaring dividends but can they recall from a shareholder?

 

[toddle2u]

If it is an illegal divident then yes they can

 

[Jaydee]

I have a friend who is a shareholder (only) in a Private Limited Company and has recently been contacted by the Adminsitrator demanding that he repay £15,000 of dividends received from the company.

Does an administrator have the power to do this? Understand that Directors can be in trouble for wrongly declaring dividends but can they recall from a shareholder?

Phil are you saying that your friend is the only shareholder, or only a shareholder?

If the latter, and therefore not a director, then section 277 of the old 1985 Companies Act could be relied on to resist claims from the company, or a liquidator, to repay illegal dividends as the obligation to repay requires knowledge that the dividend is not out of distributable reserves, and such knowledge could not be expected in somebody that is not a director.

I have won exactly this argument, on behalf of a non-director client, with regard to a company that they had invested in.

However, the counter-argument to this may be a stance taken in Bairstow -v- Queen's Moat House plc and your friend may do well in researching this case before presenting their argument to the liquidator.

 

[yorkshirejames]

Phil, I think this is the sort of issue that the principal of our company (a former insolvency practitioner, now in semi-retirement) could assist your friend with.

I've PMd you my contact details - please get your friend to call me, and then we'll try to get something arranged.