Share this content
4

Company gone to liquidation reopens new ltd

Legal implications of not moving finance agreements to new ltd when old ltd goes to liquidation

Didn't find your answer?

Working with a company that went into liquidation and reopened under new name, still carried trading under same name. 

Just came to light to me today that some of the finance agreements weren't moved over to the new company. But were left with the old, not notified about it, but still paid by the new company.

This game has been found out and now the director has been made personally liable for the outstanding, unless he agrees to make new agreement under new company.

My question is, we would need to check if all finance agreements have been moved over to the new ltd? As there could be some serious legal implications due to this?

What else would you advise to be done?

Replies (4)

Please login or register to join the discussion.

avatar
By Sarah Z
04th Aug 2020 23:22

Who is dealing with the liquidation? I would speak to them

Thanks (0)
Flag of the Soviet Union
By thevaliant
04th Aug 2020 23:27

As you've correctly pointed out in your title, this is a legal question and nothing to do with accountancy.

Having said that, I've encountered similar in my time auditing. HP agreements set up in one company name, paid by another. Usually, as long as the money keeps coming, the finance company doesn't care.

In the case I mentioned, a load (about ten) HP agreements were entered into by one company (dormant) but paid by another. Both had similar names, and clearly the finance company didn't check as closely as they should've. About a year into these four year agreements, finance company did a random check and this person was much better and spotted the error.

There was no talk of personal liability (I can't see how there would be really), the finance company simply said that all the agreements needed novating to the correct entity, at their (the client's) cost. If the client didn't agree, the finance company would be around in the morning to collect the vehicles.

The agreements were novated, and admin fees of £150 or so paid by the client.

Thanks (2)
avatar
By Tax Dragon
05th Aug 2020 07:57

BjorgvinMar wrote:

My question is, we would need to check if all finance agreements have been moved over to the new ltd? As there could be some serious legal implications due to this?

What else would you advise to be done?

That's three questions. Well, three question marks anyway.

1. IANAL, but I recall Justin being fairly blasé about this sort of thing. The fact that newco makes the payments may be evidence of assumption of liability for the debts.

2. IANAL, I wouldn't know.

3. "Advise"? Oh, you want advice? In respect of a specific situation? This is a discussion forum. If you want bespoke advice in relation to a specific situation, what you do is appoint an advisor. I'd say that even if the specific situation didn't give rise to concerns about "serious legal implications". Given it does, I'd say the advisor should be a solicitor or lawyer. Not an accountant or tax advisor.

Thanks (0)
Lisa Thomas
By Insolvency Practitioner
05th Aug 2020 12:03

What is your role here?

If it is your Company that has given finance then you would have to approve the novation/assignment of the old contractacross to 'Newco'. Otherwise the debt still lies with the old Company and/or any guarantors.

You might prefer to put this post here as it does not relate to accountancy:

https://www.ukbusinessforums.co.uk/forums/legal.57/

Thanks (0)
Share this content

Related posts