So scared, debt recovery limited

[BlueSky2019]

Please be gentle I am very near to the edge.
Limited company went into insolvency November 2023.
Previous partner had mental breakdown 2020 and he was bought out for £40k My now ex husband ran the business pretty much single handedly although legally I was also a director.

Everything went quiet until yesterday when I was slapped with a horrifyingly long notice of legal action to recover the £.40k plus return of overdrawn DLA £6k, giving what I think is 28 days to pay.
Ex husband has had had the same letter.

I am utterly terrified ; the past 5 years have been horrendous on a personal front; dealing with mental illness and death.
I am finally about to exchange contracts on a house purchase and I don’t know what to do.

ExH says he is going to soeak to them Monday and try to negotiate a repayment sum. According to him the liquidators told him a while ago they just wanted a gesture.
He also said that if they won’t budge he will find the money and pay himself. Is that possible? Do they care who oays money?

Again please be kind, I can’t take much more

 

[Chris Ashdown]

Do not mess around trying to talk to them, You need to find a commercial lawyer straight away (a lawyer who deals in business law rather than one who does house purchase etc). it will unfortunately cost you money but for the best outcome it will be worth it, And you will probably get a free 30 min talk to understand the basics of your case

 

[BlueSky2019]

Thank you for replying. I will seeknadvice 1st thing Monday morning.
I can’t believe this is happening

 

[FreddyG]

ExH says he is going to soeak to them Monday and try to negotiate a repayment sum. According to him the liquidators told him a while ago they just wanted a gesture.
He also said that if they won’t budge he will find the money and pay himself. Is that possible? Do they care who oays money?

Talking to this debt purchasing company is the very LAST thing your clueless ex should be doing. They bought your debt for something like 10p on the pound, knowing full well that the delinquent party was a LIMITED LIABILITY company. What they want is an admission of culpability and his showing a willingness to pay. Then they have got him - and because you were a fellow director - that puts you in a 'difficult' position.

You need proper legal advice and to present a lawyer with all the details.

 

[BlueSky2019]

Thank you for replying. I will seeknadvice 1st thing Monday morning.
I can’t believe this is happening

Are extenuating circumstances ever taken into consideration?

 

[Newchodge]

WHO has sent the demand? Is it a county court judgment? Who wants the 40K returning?

EDIT: Please try not to worry. This sounds like a fishing expedition. Carry on with your house purchase. Ask your ex to do nothing at all, yet. And breathe, deeply.

 

[FreddyG]

Please take a long, deep breath and relax. Remember what HG Wells once wrote, "The crisis of today is the joke of tomorrow."

There are options here. I understand how overwhelming this must feel, especially on top of everything you’ve already faced in the past few years. Here’s what I would suggest:

!. Please don’t engage with the liquidators or debt recovery firm directly until you’ve spoken to a solicitor. It’s completely understandable to want to “fix” things quickly, but right now your best defence is to pause and get proper legal advice.

2. Find a solicitor who deals with insolvency or director liabilities.

Many offer a free first call and they’re there to protect people exactly like you. They can review what’s been sent to you, explain your position, and help negotiate if needed.

3. Collect any and all paperwork, esp. for the following -

• The £40,000 buyout of the former partner
• Your role as a director and how active you were (if at all)
• The £6,000 director’s loan, if anything shows how or why it was used

This will help the solicitor build your case and protect your interests. As Goethe wrote, "The Devil is hiding in the details!"

4. House purchase - Don’t panic. This doesn’t automatically ruin your plans, but a solicitor will help you decide if you need to delay or not. Most of these cases are sorted without litigation.

5, Your ex's offer to pay. In principle, liquidators don’t care who pays, as long as someone settles. He may not be liable for some or all of the debt - we are back to Goethe again! So admitting liability at this stage is premature to say the least!

The important thing is that you’re taking action.

If you want, I can help you find a solicitor in your area or send you some names to call. Just let me know via a DM.

You are at the beginning of sorting out this nonsense.

EDIT - P.S. As Cyndy says, these people are on a fishing expedition!

 

[BlueSky2019]

Thank you for replying. I will seeknadvice 1st thing Monday morning.
I can’t believe this is happening

Are extenuating circumstances ever taken into consideration

 

[BlueSky2019]

WHO has sent the demand? Is it a county court judgment? Who wants the 40K returning?

EDIT: Please try not to worry. This sounds like a fishing expedition. Carry on with your house purchase. Ask your ex to do nothing at all, yet. And breathe, deeply.

 

[BlueSky2019]

Thank you Both; you’re right it is totally overwhelming and a huge shock.
The letter is from the insolvency company’s solicitor demanding reply within 28 days with a proposed payment plan.

 

[BlueSky2019]

Please take a long, deep breath and relax. Remember what HG Wells once wrote, "The crisis of today is the joke of tomorrow."

There are options here. I understand how overwhelming this must feel, especially on top of everything you’ve already faced in the past few years. Here’s what I would suggest:

!. Please don’t engage with the liquidators or debt recovery firm directly until you’ve spoken to a solicitor. It’s completely understandable to want to “fix” things quickly, but right now your best defence is to pause and get proper legal advice.

2. Find a solicitor who deals with insolvency or director liabilities.

Many offer a free first call and they’re there to protect people exactly like you. They can review what’s been sent to you, explain your position, and help negotiate if needed.

3. Collect any and all paperwork, esp. for the following -

• The £40,000 buyout of the former partner
• Your role as a director and how active you were (if at all)
• The £6,000 director’s loan, if anything shows how or why it was used

This will help the solicitor build your case and protect your interests. As Goethe wrote, "The Devil is hiding in the details!"

4. House purchase - Don’t panic. This doesn’t automatically ruin your plans, but a solicitor will help you decide if you need to delay or not. Most of these cases are sorted without litigation.

5, Your ex's offer to pay. In principle, liquidators don’t care who pays, as long as someone settles. He may not be liable for some or all of the debt - we are back to Goethe again! So admitting liability at this stage is premature to say the least!

The important thing is that you’re taking action.

If you want, I can help you find a solicitor in your area or send you some names to call. Just let me know via a DM.

You are at the beginning of sorting out this nonsense.

EDIT - P.S. As Cyndy says, these people are on a fishing expedition!

 

[BlueSky2019]

Talking to this debt purchasing company is the very LAST thing your clueless ex should be doing. They bought your debt for something like 10p on the pound, knowing full well that the delinquent party was a LIMITED LIABILITY company. What they want is an admission of culpability and his showing a willingness to pay. Then they have got him - and because you were a fellow director - that puts you in a 'difficult' position.

You need proper legal advice and to present a lawyer with all the details.

I don’t know how to DM but yes please
to suggestions for appropriate solicitors in my area

 

[FreddyG]

I have sent you a DM or PM (or whatever one calls these things!) so that you can reply.

 

[Elliot Green]

Please be gentle I am very near to the edge.
Limited company went into insolvency November 2023.
Previous partner had mental breakdown 2020 and he was bought out for £40k My now ex husband ran the business pretty much single handedly although legally I was also a director.

Everything went quiet until yesterday when I was slapped with a horrifyingly long notice of legal action to recover the £.40k plus return of overdrawn DLA £6k, giving what I think is 28 days to pay.
Ex husband has had had the same letter.

I am utterly terrified ; the past 5 years have been horrendous on a personal front; dealing with mental illness and death.
I am finally about to exchange contracts on a house purchase and I don’t know what to do.

ExH says he is going to soeak to them Monday and try to negotiate a repayment sum. According to him the liquidators told him a while ago they just wanted a gesture.
He also said that if they won’t budge he will find the money and pay himself. Is that possible? Do they care who oays money?

Again please be kind, I can’t take much more

Why are they pursuing £40k in relation to the buy out?

 

[FreddyG]

Why are they pursuing £40k in relation to the buy out?

A damn good question and I failed to join the obvious fourty-thousand dots! They are thinking of the UK Insolvency Act 1986, Section 238, and of suspected "transaction at undervalue" and that can be challenged by liquidators if it occurred within 2 years before the company entered liquidation, and the company gave away assets or paid more than was reasonable without receiving full value in return.

If the company paid £40k to buy out the partner, but the partner wasn’t owed that money contractually, or there’s no clear valuation justifying it, or the company got no equivalent benefit in return (like shares or IP or contracts), then the liquidators may argue the company was effectively “giving away” company funds, to the detriment of other creditors.

Even if it seemed fair at the time, in insolvency hindsight, liquidators will scrutinise everything.

Also under the Insolvency Act (Section 239 says Google!), a preference occurs if the company gave preferential treatment to one party (like a former director or shareholder) ahead of others, usually within 6 months before insolvency.

If they see the £40k as a way to “get a partner out” or protect a friendly creditor, especially if the partner was connected to the business, that may be regarded as a preference.

If the money came from company funds, not from the personal accounts of the remaining directors (like the ex-husband), then the liquidators may argue that this payout should never have come from company money, especially if the company was already in financial trouble. If the directors approved the transaction, they may now be personally liable if it’s ruled to have caused a loss to creditors.

According to my fav. pet AI, a solicitor should ask:

• Was there a written agreement for the buyout?
• Was the £40k paid in a lump sum? Over time?
• Who valued the company or share? Was it done formally?
• Was the company solvent at the time of the transaction?
• What benefit did the company receive in return?

If there's no clear documentation or valuation, the liquidators are likely assuming the buyout disadvantaged the creditors — and they want to claw the money back into the pot for distribution.

A specialist solicitor will help build a defence, such as:

• The transaction was fair and reasonable,
• It was based on market value,
• The company was solvent at the time,
• The directors acted in good faith and on professional advice.

Even if that doesn’t fully succeed, a solicitor can negotiate a much smaller “gesture” settlement, which may be what the liquidators are ultimately after.

And talking of gestures - you stated earlier "According to him the liquidators told him a while ago they just wanted a gesture."

I hope that in the course of any contact with the liquidators, he didn't do anything as bone-headedly idiotic as making any admission of liability, directly or indirectly, written or verbal! It is best to have no direct contact.

Something seems to tell me that you are the passive victim of gross incompetence by two men, your Ex and his business buddy.

 

[Daybooks]

Why are they pursuing £40k in relation to the buy out?

I suspect it needs clarifying who paid what, to whom, what for and when! Then how was it recorded in the accounts to the extent needed and what did the balance sheet look like at the time.

 

[Elliot Green]

A damn good question and I failed to join the obvious fourty-thousand dots! They are thinking of the UK Insolvency Act 1986, Section 238, and of suspected "transaction at undervalue" and that can be challenged by liquidators if it occurred within 2 years before the company entered liquidation, and the company gave away assets or paid more than was reasonable without receiving full value in return.

If the company paid £40k to buy out the partner, but the partner wasn’t owed that money contractually, or there’s no clear valuation justifying it, or the company got no equivalent benefit in return (like shares or IP or contracts), then the liquidators may argue the company was effectively “giving away” company funds, to the detriment of other creditors.

Even if it seemed fair at the time, in insolvency hindsight, liquidators will scrutinise everything.

Also under the Insolvency Act (Section 239 says Google!), a preference occurs if the company gave preferential treatment to one party (like a former director or shareholder) ahead of others, usually within 6 months before insolvency.

If they see the £40k as a way to “get a partner out” or protect a friendly creditor, especially if the partner was connected to the business, that may be regarded as a preference.

If the money came from company funds, not from the personal accounts of the remaining directors (like the ex-husband), then the liquidators may argue that this payout should never have come from company money, especially if the company was already in financial trouble. If the directors approved the transaction, they may now be personally liable if it’s ruled to have caused a loss to creditors.

According to my fav. pet AI, a solicitor should ask:

• Was there a written agreement for the buyout?
• Was the £40k paid in a lump sum? Over time?
• Who valued the company or share? Was it done formally?
• Was the company solvent at the time of the transaction?
• What benefit did the company receive in return?

If there's no clear documentation or valuation, the liquidators are likely assuming the buyout disadvantaged the creditors — and they want to claw the money back into the pot for distribution.

A specialist solicitor will help build a defence, such as:

• The transaction was fair and reasonable,
• It was based on market value,
• The company was solvent at the time,
• The directors acted in good faith and on professional advice.

Even if that doesn’t fully succeed, a solicitor can negotiate a much smaller “gesture” settlement, which may be what the liquidators are ultimately after.

And talking of gestures - you stated earlier "According to him the liquidators told him a while ago they just wanted a gesture."

I hope that in the course of any contact with the liquidators, he didn't do anything as bone-headedly idiotic as making any admission of liability, directly or indirectly, written or verbal! It is best to have no direct contact.

Something seems to tell me that you are the passive victim of gross incompetence by two men, your Ex and his business buddy.

Was the company solvent when the £40k was paid?

 

[Elliot Green]

I suspect it needs clarifying who paid what, to whom, what for and when! Then how was it recorded in the accounts to the extent needed and what did the balance sheet look like at the time.

Reading between the lines and speculating, I imagine £40k of company money was used to buy out a shareholder. If that's correct and the company was insolvent as a result of the transaction then that could be an issue depending on timings.

 

[Lisa Thomas]

Definitely need an insolvency solicitor to handle this for you, but unfortunately it won't be cheap.

I can recommend one if you dm me.