Changing from one Ltd Company to another- Old debts?

Changing from one Ltd Company to another- Old...

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Hi everyone. Any help on this would be gratefully appreciated.  A client used to have 'Ltd Company A'. The company stopped trading after running up large debts. The client stayed in the same premises but set up 'Ltd Company B' The client is now trying to change this energy supplier, but the supplier refuses to co-operate as Ltd Company A has an outstanding liability of £7000 and have threatened to cut of his energy supply. Is this acceptable since a different Ltd company is being used, or are they within their rights knowing that the same 'client' who ran up the debt is still at the premises. The client is the only shareholder of both companies.

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By johngroganjga
14th May 2014 13:15

They can do what they like. 

They can do what they like.  They don't have to supply the new company if they don't want to.  But what happened to the old company after it stopped trading?  If it was liquidated it sounds as though the energy supplier was kept out of the loop by the liquidator.  If the liquidation is still in progress this is one for the liquidator to deal with.

 

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Stepurhan
By stepurhan
14th May 2014 14:35

Stand in their shoes

The same person wants to operate from the same premises presumably doing the same thing. If you were owed £7,000 would you be inclined to co-operate with what is, for most practical purposes, the business that owed you that amount? Do you really think companies should be legally forced to act for anyone under these circumstances?

I think you will find a lot of people on here take a dim view of people walking away from debts and starting up a new company. It's about time such practices were made illegal.

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By Accounting-rookie
14th May 2014 14:56

Thanks for your help. I thoroughly agree, I wouldn't co-operate either. I also wouldn't have told the client to set up a different Ltd Company to avoid paying their creditors either but colleagues within my company seem happy to advise this regularly

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By Democratus
14th May 2014 16:49

On a practical note

How did the client maintain the utility supplier after the previous co folded. Who owns the premises? A new lease should have been granted for the new tenancy.  This will help Co B confirm that they are not Co A and not liable.

If Co B continued to stand in the shoes of Co A after insolvency then i can appreciate the position the utility supplier is in. It seems that your colleagues advice stops short of the practical things Newco needed to do to properly sever the association with Oldco.

That being said it still stinks if this move was purely to avoid debts rather than deal with them, as oppossed to a real insolvency. If Newco is running the same business on the same model then surely the same thing will happen again.

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