Worried about my business partner

Discussion in 'Insolvency' started by Jack3d, Apr 28, 2020.

  1. Jack3d

    Jack3d UKBF Newcomer Free Member

    1 0
    Hi, my names Jack and I have come here for some advise. I have recently been made up to director of one of my friends labour supply companies. Due to corona virus we havnt been paid quite a large some of money from a client. We have paid out wages for 2 months for 15 guys and multiple plant. We now have no profits left in the business only VAT and tax money. We are now thinking the client is trying to pull a fast one saying he hasnt got any money left.

    My friend who I have watched grow this business from nothing is now thinking of closing it down as our overheads are now eating into the vat and tax money. He is panicing because he has put all of his own money into the business and now has nothing left. He is thinking of ways to draw the remaining vat and tax money out of the business for himself. From drawing it out to saying his has a drug problem to sending money internationally to a friend for "machinery that didnt arrive". I have advised against this as I'm sure its against the law and I dont want to be dragged into it.

    So my question is, is there anyway for him to not be left completely broke from this situation?

    If this goes to court can solicitors prove the client is hiding money? (assuming hes pulling a fast one)

    Can HMRC go after me personally for something illegal he has done?

    Thanks in advance
    Jack
     
    Posted: Apr 28, 2020 By: Jack3d Member since: Apr 28, 2020
    #1
  2. Gavin Bates

    Gavin Bates UKBF Enthusiast Free Member

    664 133
    Hi

    I am afraid the simple answer is no.

    If he takes the money out there is always the possibility of action being taken against him.

    Regards

    Gavin
     
    Posted: Apr 29, 2020 By: Gavin Bates Member since: May 9, 2016
    #2
  3. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

    5,954 1,900
    You have had the legal answer from Gavin but the alternative is to look further into the affairs of the customer who hasn't paid you.

    Are they still trading and is it a substantial company
     
    Posted: Apr 29, 2020 By: Ian J Member since: Nov 6, 2004
    #3
  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,908 848
    and look into government support schemes - furloughing & business support loans & grants.
     
    Posted: Apr 29, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
    #4
  5. Big G

    Big G UKBF Regular Free Member

    452 131
    Hi Jack,

    Sorry to hear about this current situation.

    As the above posters have said. Taking money out of the business could always result in an investigation by HMRC / Insolvency Service / Insolvency Practitioners if the company then is liquidated.

    I'd suggest that first port of call is to look at recovering the funds due and owing to the business. Who owes the money to the business? Have you carried out company/credit checks to find out what they have? I certainly would not believe anyone that says they do not have any money left and cannot pay and I'd suggest that you pursue them rigorously.

    Happy to have a look in to the debtor company for you and advise completely free of charge if you like. Just pm me their details.

    Best of luck.
     
    Posted: Apr 29, 2020 By: Big G Member since: Dec 15, 2010
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

    21,996 2,586
    Sometimes when a business owner says they haven't any money left and cannot pay they are indeed telling the truth.
    Currently finding a company with no money is going to be hard?
     
    Posted: Apr 29, 2020 By: Mr D Member since: Feb 12, 2017
    #6
  7. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,486 436
    If the Company enters a formal insolvency procedure there will be a statutory investigation by the IP into the Directors conduct.

    This means that any transactions the Company entered into whilst you were Director could come back to bite you personally.

    I appreciate you are trying to help your friend but it might be best for you to resign as Director and leave him to sort things out.

    He should be taking advice from an IP. He shouldn't prefer himself over other creditors by paying his loan back- this is illegal when a Company is insolvent.
     
    Posted: Apr 29, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #7
  8. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

    4,923 1,638
    Don't take any money and try to seek as much Ovid help as possible
    Do everything you can to chase this debt
    Once again your business should not be going bust because of the virus.
    As I have said these are very unusual times and the experts maybe tempted to talk you into bankruptcy like it is a normal day
    I predicted on this site some weeks ago that the IPs will be keen to shut companies When the government would prefer them to be saved
     
    Posted: Apr 29, 2020 By: JEREMY HAWKE Member since: Mar 4, 2008
    #8
  9. Porky

    Porky UKBF Regular Full Member

    162 63
    Jack

    i feel your pain here and fully understand why he’s tempted but it’s just not worth it, it really isn’t. It’s one thing closing a business with a few debts and it’s another if you are found guilty of fraud - you can do time for that!

    As others have said go after the debtor, agree terms with them if you can, if you have possible future work you can do and need capital to bridge this period apply for the bounce back loan, get what you can to bridge this through to the other side.

    You can do it - Good luck
     
    Posted: Apr 29, 2020 By: Porky Member since: Dec 27, 2019
    #9
  10. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,471 2,364
    As a Director you have your official duties to abide to by law

    I would follow Lisa suggestion and resign immediately
     
    Posted: Apr 29, 2020 By: Chris Ashdown Member since: Dec 7, 2003
    #10
  11. JEREMY HAWKE

    JEREMY HAWKE UKBF Legend Full Member

    4,923 1,638
    I would but not if you can persuade the other lad to stop acting like a clown and take advantage of anything that maybe on offer to the company .
    Question
    Would the company have a future if we did not have the Corona virus ?
     
    Posted: Apr 29, 2020 By: JEREMY HAWKE Member since: Mar 4, 2008
    #11
  12. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,486 436
    OP says the other Director has a drug problem so it might be difficult to convince him to 'stop acting like a clown'. This may also be the reason for the company's issues.
     
    Posted: Apr 29, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #12
  13. Opinion87

    Opinion87 UKBF Regular Free Member

    514 143
    No, I think he is saying his friend is considering pretending he has a drug problem.
     
    Posted: Apr 29, 2020 By: Opinion87 Member since: Jul 1, 2015
    #13
  14. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,471 2,364
    What would happen, if he the other director takes the money, and then resigns, leaving the op as the only director, who has to carry the can, especially if they IP can prove he was aware of the situation and did nothing to stop it
     
    Posted: Apr 29, 2020 By: Chris Ashdown Member since: Dec 7, 2003
    #14