Can they force a liquidation? HELP

Can they force a liquidation? HELP

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Hi All,

I run a manufacturing company with two other people, who have 75% between them.

Before I joined the company, they built up debts, and I have been turning the company around.
We decided to do a CVA (company voluntary arrangement), and I have been doing the work for it.
The company helping us prepare it think it has a very good chance of going through, and the business surviving for the foreseeable.
The beauty is also that the creditors get a lot more than in liquidation, and the possibility of getting 100%.

The directors believed that they would get redundancy from the redundancy payments office (RPO), because they would be resigning and be made redundant as part of the CVA.

They now want to force the company into liquidation, in two beliefs.
One being that they may get redundancy, again from the RPO, and the second being that they will be able to buy the company from the liquidator cheap (quickly before anyone else gets to bid for the business).

I know that they won't get the redundancy, so that's not my problem.

Unfortunately it is down to me being a bit bitter, wanting to find out if I can also protect some of the staff that they would get rid of, and protect the creditors and the business. Their intention is basically to look after themselves (they are Father and Son), and they are not interested in who they hurt.

Originally they were going to keep their shares, and when the CVA was satisfied, we would begin paying dividends again, and they would get their share of profits.

Is there anyone I can talk to, or is there anything I can do, because the business is good, and they are not working in the best interests of the company, creditors or employees.

Ay help you could possibly provide would be very gratefully received.

Thanks

David

Replies (7)

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By User deleted
21st Mar 2013 20:30

Or any other advice, please.
Or any other advice you may have!
Thanks again.

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Glenn Martin
By Glenn Martin
21st Mar 2013 22:01

Is the company solvent
You say the CVA will 100% settle the creditors of the company are you expecting good profits going forward. You need to provide more details for people to advise on here. It could be that insolvency and starting again would give you the best chance as a CVA that you intend to 100% settle is not realistic if its saddled with debt now unless you or the directors know something that we don't.

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By User deleted
21st Mar 2013 22:09

Apologies, yes
The current expectation and forecasts show approximately 60-70% to be paid through the CVA.
A lough there is the chance of 100% if it does better than we forecast.

The liquidation expectation is for about 2p.
So even if we do much worse than the forecast, there will be more paid than the liquidation.

My thought was that as directors' duty was to the protection of the creditors interests when the company was insolvent.

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Man of Kent
By Kent accountant
21st Mar 2013 22:44

Speak to an Insolvency Practitioner

There are a number of different routes which can be taken. I would recommend speaking to an IP (not the one who is the CVA supervisor) on a confidential without prejudice basis.

The CVA is an arrangement which was approved by the creditors. Its not just down to the directors about liquidating the business.

If the directors tried to force a liquidation and appointed another IP as liquidator (not sure of the legality of this) then that appointment can be challenged by a majority of the creditors and an alternative arrangement could be approved.

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Replying to michaelblake:
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By User deleted
22nd Mar 2013 06:21

Thank you for your help, but
The CVA has not yet been approved. The issue is that the other two directors now think that they will not get redundancy by going down this route (they want to keep their shares but still get redundancy - which I am told isn't an option as they keep control).

Obviously I feel virtually certain that if the creditors had the choice between the CVA and liquidation (once they know the approximate figures), they would choose the CVA.

As far as I can see, I can't do anything as my vote is worthless other than as a protest.

Is there anything that can be done, because they're not going to listen to me.

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By bernard michael
22nd Mar 2013 08:45

If they bought the business for less than a fair market value the subsequent liquidator could overturn the deal.You should seek advice from a qualified IP rather than the one performing the CVA ( are they qualified or not?)

If you tell me what part of the country the company isĀ in and what industry I may be able to suggest someone

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By User deleted
23rd Mar 2013 20:21

Thanks
We are in South Essex in manufacturing.

Thank you all for your help.
If you have any more comments or thoughts for me I would be very grateful.

Thanks again

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