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Ltd Company avoiding CCJ?

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A friend of mine is taking a motor company to court over a second hand car that was not fit for purpose, he has been advised to do this by consumer direct who say he has a strong case. He paid just over £3k for the car. He  is concerned however that the Directors have a number of companies where they can  move their assets to avoid settling the CCJ and when they have a number against them will just set up another company.

The company was only formed in September 18 so no account information is available yet. I am thinking there must be safeguards to ensure Directors cannot behave this way. A winding up order would be off the table as the cost is too restrictive. 

Can anybody advise please

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16th May 2019 13:01

You're looking for a lawyer, not an accountant.

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By AW71
16th May 2019 13:03

Can't beat the classic "a friend of mine"

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16th May 2019 13:30

The short answer is there isn't if they know what they're doing

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16th May 2019 13:32

Quote:
...there must be safeguards to ensure Directors cannot behave this way...

There aren't, or at least, none that are enforced. Phoenixism is a commonplace ruse to escape obligations. If it's particularly egregious, HMRC may go after the directors.

Is there any finance involved? It may be easier to go after the lender - moneysavingexpert.com is your best place for guidance on this.

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to paul.benny
16th May 2019 13:48

Hi Paul
There is no finance involved but the bank have said they may be able to intervene as it was paid on a debit card they were not very clear though.
He asked me for advice but I am a Financial Accountant in a government organisation so do not have any Ltd company experience. I posted anonymously as he asked me to but as I have not named anybody it was not necessary.
Thank you for your helpful reply

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to anita.bradbury
16th May 2019 13:57

Quote:

Hi Paul
There is no finance involved but the bank have said they may be able to intervene as it was paid on a debit card they were not very clear though.

A credit card might have given better protection.

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to anita.bradbury
16th May 2019 14:57

You're welcome.

If you haven't already looked, you'll find that MSE also gives some advice on chargeback when payments were made by debit card.

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16th May 2019 13:32

You've asked the question anonymously on an accounting website. You are not going to get the help you need here.

You need legal assistance.

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16th May 2019 14:51

Caveat emptor

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16th May 2019 15:27

What was wrong with the car?

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16th May 2019 17:27

I think the onus is on the buyer to check the goods before purchasing (buyer beware)

Small claims would probably award based on cost of repairs if at all - but would need to support the case with evidence from a reputable garage - and the company should be given the chance to pay before it goes to court. Normally you'd issue a 'letter before action'

A CCJ would be damaging to the directors credit rating - the CCJ is not in itself the debt but the judgement placed against a company if it refused to pay the sum that the court awards or failed to appear. First you have to go to court. But before even that, you should issue a letter before action as have to show you have given reasonable opportunity for them to accept the goods were below standard (as sold).

If the car was bought on a credit card - then you can I think use the protection from the CC Act if it was not fit for purpose.

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to C Graham
16th May 2019 17:43

Quote:

I think the onus is on the buyer to check the goods before purchasing (buyer beware)

Not sure that's true where you're buying a car from a garage.

Buying it from some bloke in a motorway service area, I agree with you.

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to lionofludesch
17th May 2019 18:40

with a second hand car, there could be a hidden history eg unpaid lease, accident etc - which is why the AA and others offer a vehicle check. So it is up to the buyer to reassure him/herself that the vehicle is fit for purpose. That's really what I meant by buyer beware because that info will not necessarily be offered by the garage/dealer particularly small ones.

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to C Graham
17th May 2019 19:14

We'll have to disagree.

I'm no expert, but I understand that a trader has an obligation to ensure that what he sells is of merchantable quality.

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to lionofludesch
17th May 2019 19:57

yes but which is open to some interpretation. Did the buyer test drive it. When was he aware of the problems?

Law states re 2nd hand cars ...

The car must be of satisfactory quality
This rule can be tricky when it comes to second-hand cars, as the definition of satisfactory depends on a number of factors, including the car’s age, how much you paid, and how the seller described it. If the seller told you that the car was in good condition only for it to stop working a week after you bought it, this could be considered to be a misleading description. However, if the seller made no promises as to how well the car ran, it may be difficult to make a claim if it suddenly stops working.

The seller can also not be held responsible if they drew your attention to any defects the car had before you bought it – for example, you would not be able to make a claim that a rusted car was unsatisfactory if the seller pointed out the rust to you before you bought the car.

However, if the rust was more serious and noticeable than you were led to believe, you could have a claim.

be wary of dealers who display signs along the lines of “sold as seen” with their cars. If you buy a car under these conditions, it dramatically reduces your Sale of Goods Act rights.

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to C Graham
17th May 2019 22:20

Quote:

yes but which is open to some interpretation. Did the buyer test drive it. When was he aware of the problems?

The OP says his mate was advised that he has a good case.

That's good enough for me. I'm not a lawyer.

We can speculate - but that's all.

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17th May 2019 18:13

Nothing wrong on it's own about registering multiple companies depending on the garage or branch. Many retailers and car dealerships do this.

Your friend needs to look at the entity on the invoice and sue them.

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20th May 2019 11:12

Your friend's limited options seem to be:

1. Get a CCJ and enforce
2. Pay to Liquidate the Company if the CCJ remains unpaid and let a Liquidator investigate and potentially bring about claims
3. Get money back from the Bank if s75 of Consumer Credits Act applies.

Unfortunately there is nothing to stop the Directors from Liquidating the Company to avoid the debt, unless your friend can show the debt is owed personally - perhaps for fraud.

Your friend can complain here if the Directors have a history of doing this but it's unlikely to come to anything for such a nominal debt:

https://www.gov.uk/complain-about-insolvency-practitioner

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