Trouble with creditor...

[Funnyface]

Trouble with creditors...


Hi everyone, i have been on this forum alot but have never had to post anything as i have found all the answers i need by reading past posts. This one however, i cannot find an answer for...


So i started a business in January of last year (2018) and rented a space from a friend who’s company owned a building. I started the business with another friend. We were both directors but the landlord was a friend of mine. (Landlord did not know friend at the time)

Anyway, we never signed a lease for the building as he was not that bothered about it (or so he said)
We traded for around 6 months, then realised We were making no money and we lost our main contract after the 6 months, so we decided to call it a day.
I went and got a job, but the other director carried on for another month or so. Then we started the shutting down process.

The landlord had told me not to worry about the rent payments, but just make sure that his other company accounts were paid up to date (his other company was a supplier of ours)
So we did that.

Now though, i have recieved threatening letters saying I personally owe the money even though we have made the company insolvent and applied for strike off.

(Just to point out aswell, he is only chasing me, not the other director of the company)

His argument is that the invoices he sent to me for the rent did not have LTD after the company name, and therefor were addressed to me personally and he says he was never aware that my company was LTD. (None of the invoices actually have my actual name on them, just the company name)
BUT the invoices i paid to his other company all have Ltd after my business name, so he was defined aware it was Ltd.

Now my question is, just because i never picked up on the mistake on the invoices, does this mean that he can chase me personally and take me to court as he threatens?

Any advice would be amazing as i am getting slightly worried, but i have no assets even if he did take me to court. I mean, my car isnt even worth £50.

Thanks in advance.

 

[Lisa Thomas]

You might like to put this post under the 'legal' section of the forum.

 

[Mr D]

Did you ever sign anything for the landlord?

And the invoices - were they for your company name limited? Scratch that you have given the info.

 

[Funnyface]

Did you ever sign anything for the landlord?

And the invoices - were they for your company name limited? Scratch that you have given the info.

I never signed anything. The invoices he sent were addressed to my company but minus the ltd. I suspect he did it on purpose.

 

[Mr D]

I never signed anything. The invoices he sent were addressed to my company but minus the ltd. I suspect he did it on purpose.

And did you ever notify him it was incorrect?

 

[Funnyface]

And did you ever notify him it was incorrect?

I did not. I never noticed it as i never delt with the account stuff. The other director dealt with all of that.
He definitely knew it was a ltd company though as his other company that was supplying me with parts invoiced me with ltd next to my company name...

 

[Funnyface]

You might like to put this post under the 'legal' section of the forum.

Thanks lisa. I will do that now.

 

[Stedurham]

How much is he after? If you have nothing let him chase you will cost him more than he is probably owed. Also never do business of any kind with friends or family

 

[Funnyface]

How much is he after? If you have nothing let him chase you will cost him more than he is probably owed. Also never do business of any kind with friends or family

It equates to around £15k. I have learned this lesson now. In fact im not sure i will be starting any business’ for a long time. I cant afford to mess my wife and kids lives up.

 

[Stedurham]

If you haven't signed anything he hasn't got an argument really

 

[Funnyface]

If you haven't signed anything he hasn't got an argument really

Thats what i thought, but i have read other things that would suggest differently. But the fact that he is now sending stuff to my personal address by hand is sort of scaring me.

 

[Mr D]

I did not. I never noticed it as i never delt with the account stuff. The other director dealt with all of that.
He definitely knew it was a ltd company though as his other company that was supplying me with parts invoiced me with ltd next to my company name...

If it was a limited company debt then the company owes it. Not the directors.
Unless a personal guarantee was signed. And usually you know you have signed one.

For sole traders the person is liable for the debts. For partnerships each partner is usually jointly and severally liable for the debt - the creditor can chase who they want.

But as you say its limited....

 

[Mr D]

Thats what i thought, but i have read other things that would suggest differently. But the fact that he is now sending stuff to my personal address by hand is sort of scaring me.

I think scaring you may be the point of sending it.

 

[Stedurham]

Ask other director what hes signed if you haven't signed a lease, personal agreement etc he can tr and scare you but wont win

 

[Funnyface]

Thanks for the help Mr D by the way.

It is most definitely a Limited company, and i most definitely never signed ANYTHING.

The only thing that he ‘has on me’ is that i never picked up on the fact that the invoices he sent didnt state it was a Limited company.

If he did decide to start a court case to claim the money off me personally... what would happen? Would i just get a letter with a court date on? I dont want me wife seeing stuff like that and worrying thats all.

 

[Funnyface]

Ask other director what hes signed if you haven't signed a lease, personal agreement etc he can tr and scare you but wont win

Other director definitely never signed anything.

 

[pentel]

Was the limited company formed before or after you took possession of the premises?

 

[Funnyface]

Was the limited company formed before or after you took possession of the premises?

At the same time...

 

[Funnyface]

Was the limited company formed before or after you took possession of the premises?

Although technically before, we got registration conformation in december and moved in january.
Thanks

 

[pentel]

Wanted to check that you hadn't moved in before the company was formed. If that had happened the landlord would probably had a very strong case to hold you accountable.

 

[WaveJumper]

Funnyface just to clarify are the invoices he's now chasing you for, are these for rent which he said not to worry about and for a lease you never had in place or have I missed something ?

 

[Funnyface]

Funnyface just to clarify are the invoices he's now chasing you for, are these for rent which he said not to worry about and for a lease you never had in place or have I missed something ?

You are correct, the invoices he is chasing me is for rent payments he told me not to worry about, obviously there us no written proof of this. But he said he would rather i paid the accounts for his other company than this. And i never had a lease or written / signed agreement for the premises either. But he is sending me letter saying i am personally accountable for the debts. Even though it was my ltd company that was in the building, paying bills to his other company, using the limited name...

 

[Engage Legal]

Hi FunnyFace

My initial/general thoughts are: 1) The fact that the invoices had the company name on it appears telling. The fact that the word "limited" was not used after the company name is likely immaterial.

2) even if there was some form of agreement between you personally and him, the fact that he has agreed for no subsequent rental payments could also act in your favour as some form of defence.

On its face it looks like the (former) landlord is trying it on.

 

[UK Contractor Accountant]

And i never had a lease or written / signed agreement for the premises either.

yes but you had a verbal contract to take the premises!

As a previous poster alluded to, was that verbal agreement made before the company was created so you were effectively acting in a personal capacity as opposed to a Director of a company.

If before then you have effectively sublet/assigned the lease to your company which is why the landlord is trying to pursue you direct.

 

[Funnyface]

Hi FunnyFace

My initial/general thoughts are: 1) The fact that the invoices had the company name on it appears telling. The fact that the word "limited" was not used after the company name is likely immaterial.

2) even if there was some form of agreement between you personally and him, the fact that he has agreed for no subsequent rental payments could also act in your favour as some form of defence.

On its face it looks like the (former) landlord is trying it on.



Engage Legal – we connect businesses with the right solicitors for free
*Note all posts are general in nature. If you want specific legal advice, get a lawyer*

Thanks alot for sharing your thoughts. Im hoping you are correct. But i have known him for a while and i can almost guarantee he will take it court even if he knew he wouldnt win anything. What would happen in this situation? Would i get a letter with a court date or something? Or would they get hold of me first to see if it is even worth taking to court?

Thanks

 

[Funnyface]

yes but you had a verbal contract to take the premises!

As a previous poster alluded to, was that verbal agreement made before the company was created so you were effectively acting in a personal capacity as opposed to a Director of a company.

If before then you have effectively sublet/assigned the lease to your company which is why the landlord is trying to pursue you direct.

Hi!
I see what you mean, but i have just looked this up and i registered the company in november and then he offered me the unit in december. Then we moved in in january. So this should not be an issue.

Thanks.

 

[WaveJumper]

Not turning out to be much of a friend, lesson learnt here about going into business with friends or family and for the future always make sure you have everything documented up properly and if you don't understand it get legal advice. Having said this you problem is your friend could assume or argue he leased / rented the space to you personally, the fact you run your LTD company from there is probably in material from what you have said he was invoicing you for the space and your LTD for the stock as you mentioned if you thought this was incorrect you should have made this clear to him at the time. Considering the amount of money in question you can probably only stick too your guns fend off paying using the LTD and hope your 'friend' gives up the chase and it does not get any messier.

One other thought is should your friend have been sub letting part of his premises out, hence why no documents were in place ?

 

[WaveJumper]

Did you pay any rent if so did you put these invoices through your LTD company

 

[Funnyface]

Not turning out to be much of a friend, lesson learnt here about going into business with friends or family and for the future always make sure you have everything documented up properly and if you don't understand it get legal advice. Having said this you problem is your friend could assume or argue he leased / rented the space to you personally, the fact you run your LTD company from there is probably in material from what you have said he was invoicing you for the space and your LTD for the stock as you mentioned if you thought this was incorrect you should have made this clear to him at the time. Considering the amount of money in question you can probably only stick too your guns fend off paying using the LTD and hope your 'friend' gives up the chase and it does not get any messier.

One other thought is should your friend have been sub letting part of his premises out, hence why no documents were in place ?

Thanks wavejumper.
I see what your saying about the fact that he could be invoicing ‘Me’ for the premises and my ‘ltd company’ for the services BUT in that case, the invoices to ‘me personally’ should have my personal name on them right? But they dont! They have my company name but just without the limited part...

And also, you have an interesting point on that last part... he is invoicing me for the premises under a certain company name BUT the actual building is owned by his other company that was supplying us parts... it is literally the same building but just a side room on that building. So maybe he isnt supposed to be subletting that? Is there a way i can find out for sure who owns the building?

Thanks

 

[Engage Legal]

Answers below in bold. Am still trying to figure out how to insert the quotes properly.

"Thanks alot for sharing your thoughts. Im hoping you are correct. But i have known him for a while and i can almost guarantee he will take it court even if he knew he wouldnt win anything. What would happen in this situation?" - You go to court. Presumably you would win. He may have to pay some, or all of your legal costs.

"Would i get a letter with a court date or something?" Most likely - there is a fairly strict process for this to ensure you are notified and to try and resolve matters prior to court.

"Or would they get hold of me first to see if it is even worth taking to court?" - as above. Under this process you have a chance to put in a defence.

 

[Funnyface]

Answers below in bold. Am still trying to figure out how to insert the quotes properly.

"Thanks alot for sharing your thoughts. Im hoping you are correct. But i have known him for a while and i can almost guarantee he will take it court even if he knew he wouldnt win anything. What would happen in this situation?" - You go to court. Presumably you would win. He may have to pay some, or all of your legal costs.

"Would i get a letter with a court date or something?" Most likely - there is a fairly strict process for this to ensure you are notified and to try and resolve matters prior to court.

"Or would they get hold of me first to see if it is even worth taking to court?" - as above. Under this process you have a chance to put in a defence.


Engage Legal – we connect businesses with the right solicitors for free
*Note all posts are general in nature. If you want specific legal advice, get a lawyer*

Thanks for that!
Well, thats quite annoying but if it has to be done to solve the problem then it has to be done.
What would happen if HE won? I literally have 0 money. I have no assets worth any money. My car isnt even worth more than £50. What would happen?
Annoyingly, he is a millionaire. But obviously thats not the point. Just frustrating. And thats why he doesnt care about chasing people for money, even if it costs him more than the claim is worth.

Thanks for your advice. Really appreciated.

 

[WaveJumper]

This is how he became a millionaire in answer to your post above:

1, If all invoices in company name i would think you are on safer ground, but I would seek proper legal advice if you want peace of mind

2, If he owns the building outright as you said he can basically within reason do what he wants

 

[Engage Legal]

Thanks for that!
Well, thats quite annoying but if it has to be done to solve the problem then it has to be done.
What would happen if HE won? I literally have 0 money. I have no assets worth any money. My car isnt even worth more than £50. What would happen?
Annoyingly, he is a millionaire. But obviously thats not the point. Just frustrating. And thats why he doesnt care about chasing people for money, even if it costs him more than the claim is worth.

Thanks for your advice. Really appreciated.

He would have several options. Ultimately he could bankrupt you (assuming, as I think I remember, the debt is for more than £5k). Don't want to frighten you though - you are a long way off that.

 

[Newchodge]

Three questions.

The rent invoices, sent in company name without ltd attached. What address were they sent to?
What date was the first invoice sent, and how often afterwards?
What date was the first threatening letter sent, addressed to whom, at what address?

 

[Funnyface]

Three questions.

The rent invoices, sent in company name without ltd attached. What address were they sent to?
What date was the first invoice sent, and how often afterwards?
What date was the first threatening letter sent, addressed to whom, at what address?

The invoices were sent to the address i was renting off him.
First invoice was january.
First letter was sent around jan or feb this year (around 6 months after i had stopped trading, and he knew that)
The letters were addressed to metalshop but at my home address (all be it my old home address because at the time he did not know my new address, so after hearing nothing back from me, he hand delivered them to me at my new place of work, this was last month)

Thanks.

 

[Funnyface]

He would have several options. Ultimately he could bankrupt you (assuming, as I think I remember, the debt is for more than £5k). Don't want to frighten you though - you are a long way off that.


Engage Legal – we connect businesses with the right lawyers for free
*Note all posts are general in nature. If you want specific legal advice, get a lawyer*

Lets hope he doesnt get to that stage then and i can ‘convince’ whomever that it is the company that owes the debt and not me...

 

[Funnyface]

Do i reply to the letters and try and use some defence facts or will that just give him something to use in court? Or should i just ignore them and see what happens?

Thanks

 

[Newchodge]

The invoices were sent to the address i was renting off him.
First invoice was january.
First letter was sent around jan or feb this year (around 6 months after i had stopped trading, and he knew that)
The letters were addressed to metalshop but at my home address (all be it my old home address because at the time he did not know my new address, so after hearing nothing back from me, he hand delivered them to me at my new place of work, this was last month)

Thanks.

First invoice was January 2018? Then monthly? and no attempt to collect the debt until failed delivery letters 12 months later and hand delivered letter at your place of work in February/March 2019?
I suggest you see a solicitor and ask they they send a letter requiring that he cease criminally harassing you at your place of work.

 

[Funnyface]

First invoice was January 2018? Then monthly? and no attempt to collect the debt until failed delivery letters 12 months later and hand delivered letter at your place of work in February/March 2019?
I suggest you see a solicitor and ask they they send a letter requiring that he cease criminally harassing you at your place of work.

Yes, he must have been planning this ‘attack’ all along, as the whole 6-7 months i had the business running, he told me not to worry about the invoices, but keep the accounts on his other company up to date. But he still made sure he sent monthly invoices. And then then around 12months after the original first statement, he send a letter threatening a CCJ. But obviously i had ceased trading and assumed the debt would die with the company as it was never ME who owed the money, it was the company. And then yes, hand delivering copies of the letters to me place of work.
I replied to the first letter with the ‘spongebob plan’ letter. To which he hand delivered a new letter to my house address stating that it is not the business who owes the money it is me, because the letters were never addressed to a ltd company. But the invoices all had my company name (just missing the ltd part) but none of them have my personal name.

Im repeating everything here sorry.

Thanks for your help!

 

[Gavin Bates]

Hi

There are a lot of post on this but here is my view.

Write back to the landlord, remind him that this was a limited company and that no formal agreement was even signed. He clearly knew that it was limited by the fact it had a company name and I assume received payments from the limited company.

I would then go to say that even if the above doesn't apply any claim against you is fruitless as you have no assets so even if he did push it all the way to bankruptcy this wouldn't lead to a return to him and a lot of extra costs.

Kind regards

Gavin