Purchasing Assets from Insolvency Practitioner

[GeoMal]

I'll be speaking to the IP in question (if they ever return my call) but wanted to ask the IPs on here, at what sort of monetary amount does it become worthwhile for an IP to chase assets?

The liquidated company I am interested in had mostly intellectual property and digital assets I would like to purchase; domain name (registered to the company), website, social media accounts, registered trademark (again to the company), and many digital designs of products. The statement of affairs makes no mention of these, nor the £100K of stock (as at the last submitted accounts) and the only entry under Estimated to Realise is the cash balance. This is a company that owed around £250K to creditors and at last accounts had shareholders funs of £150k.

If your experience when does it become worthwhile to chase a director for these sorts of assets; £1K, £5K, £10k or more?

Any advice would be gratefully received!

 

[Lisa Thomas]

Hi

I'm not sure what you mean by 'chasing the Director'?

Do you mean investigating what happened to the assets?

Among other things, the Liquidator has a duty to investigate what went wrong to cause the insolvency of the Company, whether the Directors have committed and misconduct (and they have the powers to pursue the Directors personally for such claims) and to realise the Company assets.

The IP will also pass their findings onto the Insolvency services who can also disqualify/fine/jail a Director.

How far the IP goes to recover assets really depends on whether it's a cost effective exercise and whether there's much of a benefit. If there is a creditors committee they can ask their opinion or for legal advice if warranted.

Maybe the stock in this case was sold pre CVL or was all subject to ROT and collected or was not owned by the Company.

 

[GeoMal]

Hi

I'm not sure what you mean by 'chasing the Director'?

Do you mean investigating what happened to the assets?

I mean that these assets are mostly digital and so will need the director's co-operation to recover. I'm pretty sure the IP isn't aware of where the hundreds of product and packaging design files are located (which computer, driver, folder etc). Plus the director would need to provide login details for the domain registrar etc.

Hi
How far the IP goes to recover assets really depends on whether it's a cost effective exercise and whether there's much of a benefit.

This is the crux of my question. Would an IP bother to contact the director if I offered £2.5K for the assets, for example?

 

[nelioneil]

In the annual accounts generally any intangible assets created internally (rather than bought or purchased) is not recognised so that's why there won't be anything there.

I can imagine it's going to be extremely difficult to value.

 

[Clinton]

I've often tried to do this - buy the domains / websites / subscriber lists / website content of companies that have gone bust - but I found most IPs too thick to understand these intangibles. (Present company excepted, of course )

They are too thick to realise these assets have value or maybe they are too thick to actually value them ... so they let these assets die.

Idiots.

 

[GeoMal]

I've often tried to do this - buy the domains / websites / subscriber lists / website content of companies that have gone bust - but I found most IPs too thick to understand these intangibles. (Present company excepted, of course )

They are too thick to realise these assets have value or maybe they are too thick to actually value them ... so they let these assets die.

Idiots.

I've spoken to the IP and they are putting together an enquiry list for the (sole) director, so there is some hope. This one is a little more obvious than most I think, the company manufactured products for direct sale to the consumer, so there should be design files for each product.

Of course, the computers have already been sent to an auction house to have the drives wiped, so there may not be that much hope!

 

[Lisa Thomas]

I mean that these assets are mostly digital and so will need the director's co-operation to recover. I'm pretty sure the IP isn't aware of where the hundreds of product and packaging design files are located (which computer, driver, folder etc). Plus the director would need to provide login details for the domain registrar etc.



This is the crux of my question. Would an IP bother to contact the director if I offered £2.5K for the assets, for example?

The Director has a duty to hand over all Company records and assets to the Lqr and the IP would need to get all assets professionally valued.

 

[Lisa Thomas]

Of course, the computers have already been sent to an auction house to have the drives wiped, so there may not be that much hope!

If they contained Co. records they should not have been wiped, they should have been backed up...

 

[GeoMal]

If they contained Co. records they should not have been wiped, they should have been backed up...

That's great to know! Thanks Lisa.

 

[stevep@mrsys]

Not quite the same issue but I couldn't find any other post closer.


A customer to whom we had recently supplied computer equipment entered into a creditor’s voluntary liquidation. We contacted the liquidator to make an offer for the equipment and were put in contact with the auctioneers in charge (one assumes) of realising the best value from the assets. We put in a written offer but heard nothing more. Later looking at the LIQ14 I noted that the whole sum realised for “Fixtures, fittings and computer equipment” was less than a quarter of what we had offered for the computer equipment alone. Does this smack of a cosy arrangement? If so how can I get in on it?

 

[Lisa Thomas]

Hard to say - perhaps your offer slipped through the net or perhaps they had to retain a lot of the PCs etc as part of the company records.

Why not contact the Liquidator and ask why they (appear) to have sold the assets at an undervalue when your offer was higher?

 

[stevep@mrsys]

Hi Lisa. "Why not contact the Liquidator and ask why they (appear) to have sold the assets at an undervalue when your offer was higher?" Call me an old cynic but I wouldn't necessarily expect a full answer from the person who possibly let my offer 'slip though the net'. I was really more interested to determine if this was a common practice. I will however contact them as you suggest.

 

[Lisa Thomas]

The Liquidator may not know anything of your offer if it was made direct via the agents.

 

[GeoMal]

Just as an update, the auction house brought in to clear the physical assets found no stock, and the IP told me that the company did not keep any stock but made products to order. The accounts for the prior 3 years showed over £100K in stock but there you go.

I enquired after the digital assets, domain, website (still running), registered trademark, product design files and packaging design files. IP has come back and said these were all sold to another company prior to administration, but that the director is willing to sell them to me! Never mind that the domain and trademark are still in the liquidated company name and that the director is not a director of any other company. The IP doesn't appear to care.

 

[Blaby Loyal]

The IP doesn't appear to care.

Make a complaint to the insolvency practitioner's regulatory body?

I'm afraid this perception of insolvency people is becoming commonplace these days.

 

[GeoMal]

Make a complaint to the insolvency practitioner's regulatory body?

I'm afraid this perception of insolvency people is becoming commonplace these days.

The IP to be fair hasn't yet seen the accounts so wasn't able to comment on whether the market value was achieved, and it would be fairly easy to show that the digital assets had little realisable value. The stock is a different thing but the last accounts were over a year old so the stock could have been run right down.

Unless some serious detective work was done on the IP's part then I can see how they wouldn't be able to do much about a director who did this.

 

[Blaby Loyal]

Any half decent insolvency practitioner would have picked up on the asset values per the last set of accounts.

Ask Lisa?

 

[GeoMal]

Any half decent insolvency practitioner would have picked up on the asset values per the last set of accounts.

Ask Lisa?

They did, but their view is that the sock had been run down. The agent turned up at the premises and found no stock, plus the director told them that stock was no longer held but everything was made to order.

 

[LiveNetworks Ltd]

Spent a fair few years in audit, but if you see £100K in stock in previous years accounts and then get told, it's been sold, then lets see the invoices. If you've cleared £100K in stock, then even a fire sale would have raised £50K?

"website (still running)"

Does the web site indicate they're in administration or does it suggest they're still trading? (Or have they subtly changed the trading name?)

"registered trademark, product design files and packaging design files. IP has come back and said these were all sold to another company prior to administration"

Almost sounds like a phoenix being pulled although I'd have expected the director to have appeared out of the ashes by now on another company.

 

[GeoMal]

"website (still running)"

Does the web site indicate they're in administration or does it suggest they're still trading? (Or have they subtly changed the trading name?)

The website doesn't have any products listed but it has a little popup message that states they are moving premises and will be back soon.

"registered trademark, product design files and packaging design files. IP has come back and said these were all sold to another company prior to administration"

Almost sounds like a phoenix being pulled although I'd have expected the director to have appeared out of the ashes by now on another company.

The director has told the IP this what they intended to do but are now willing to sell the assets to me. The IP states they don't know how much the director paid the company to purchase these assets but will find out from the accounts.

 

[LiveNetworks Ltd]

I think its safe to say you're not going to get anything from the IP, it sounds like it's been stitched up as a phoenix by the director. Moving premises and appointing an IP is as much as you need to know.

As for the sale of the intangibles, 'they've been sold to someone' then 'they've been sold to the director' now 'they could be sold to you instead' just run a mile, it's not clear who owns them, and if you say a chunk is digital designs, then you can bet you're life you'll see them again being sold by someone else in 6 months and you'll have no one left to take action against.

 

[GeoMal]

I think its safe to say you're not going to get anything from the IP, it sounds like it's been stitched up as a phoenix by the director. Moving premises and appointing an IP is as much as you need to know.

As for the sale of the intangibles, 'they've been sold to someone' then 'they've been sold to the director' now 'they could be sold to you instead' just run a mile, it's not clear who owns them, and if you say a chunk is digital designs, then you can bet you're life you'll see them again being sold by someone else in 6 months and you'll have no one left to take action against.

Thanks. Yes, I think the director played the game and the IP is looking too closely.

I'm actually not worried if I don't have exclusive use of the designs, as long as I have established my right to use them and not be chased by any others! The IP appears satisfied they are owned by the director, or a company owned by the director.