The company I work for are owed a considerable sum of money (from company "A") that has now ceased trading.
The owner of company "A" has now set up a new company (different name, but selling the same products etc.) called company "B".
The owner has now promised that company "B" will pay off company "A's" outstanding debt.
I would be most grateful if somebody could point me in the direcetion of the legality of this.
BP
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It all depends on the facts
If there is a commercial advantage to Company B, and not otherwise , it will not be ultra vires the new company's directors' powers.
Perhaps Company b can only obtain supplies on this understanding, for example. Perhaps there are trade connections being exploited.
Some years ago Counsel was consulted on the question can a parent support an insolvent subsidiary which will cease to trade? The answer was prima facie 'no', unless the group's good standing would be damaged so making the payment for the advantage of the group .