1). ABC Limited trading as ABC 2). ABC.com Limited trading as ABC 3). Ownname
ABC limited has recently gone into liquidation, ABC.com Limited is still trading as ABC.
Does the Insolvency Practitioner have a right to be able to look at accounts for ABC.com Limited or Ownname accounts when all businesses have the same director?
you state ABC ltd and ABC.com ltd. How similar were the two ABC bits, were they identical apart from the .com bit?
My answer will depend on the above.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Assuming that you are going to be coming back with the ABC bits being the same :
ABC and ABC.COM would not have been allowed to have similar names by companies house had they not shared some form of commonality such as being members of a group.
That both are also using the same trading name is a sure sign that they are in fact in reality the same entity and the insolvency practitioner is likely to see them as such.
It is possible for members of a group to become insolvent whilst others remain solvent. However, this case does not seem to warrant such treatment and I feel that the insolvency practitioner may even look at whether the use of incorporation has been misused purely to avoid the entities commitments in which case the veil may be lifted and the directors pursued directly for the companies debts.
If the veil of incorporation is not lifted then there is argument to keep ownname separate. If it is lifted then assuming that it a 100% owner / director company then as an asset of the common director it too may be dragged into the liquidation.
For this sort of case you need to involve Lawyers and accountants rather than bookkeepers as invariably it will turn extremely complicated and get incredibly expensive.
Just to make this clear. A director may have several directorships of different companies and if one goes into liquidation not due to the directors incompetence then the other companies should not be affected.
Where the companies are intertwined such as this then both the trading company and possibly the protection offered by the veil itself may be affected.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
"Assuming that you are going to be coming back with the ABC bits being the same : ABC and ABC.COM would not have been allowed to have similar names by companies house had they not shared some form of commonality such as being members of a group."
This was allowed as it was done before new rules were implemented re .COM Being added - I checked with companies house as I too was dubious about this.
"That both are also using the same trading name is a sure sign that they are in fact in reality the same entity and the insolvency practitioner is likely to see them as such."
I checked and at present the IP does not seem interested - although a creditor is making waves and it may become an issue at some point in future.
"It is possible for members of a group to become insolvent whilst others remain solvent. However, this case does not seem to warrant such treatment and I feel that the insolvency practitioner may even look at whether the use of incorporation has been misused purely to avoid the entities commitments in which case the veil may be lifted and the directors pursued directly for the companies debts."
I too would have thought he'd look at this but instead he has now sold the business and assets of ABC Limited to ABC.com Ltd and left the creditors and employees behind.
"If the veil of incorporation is not lifted then there is argument to keep ownname separate. If it is lifted then assuming that it a 100% owner / director company then as an asset of the common director it too may be dragged into the liquidation.
For this sort of case you need to involve Lawyers and accountants rather than bookkeepers as invariably it will turn extremely complicated and get incredibly expensive.
Just to make this clear. A director may have several directorships of different companies and if one goes into liquidation not due to the directors incompetence then the other companies should not be affected.
Where the companies are intertwined such as this then both the trading company and possibly the protection offered by the veil itself may be affected."
I understand your points - it just seems totally unfair on Creditors and Employees of ABC Limited who are left with nothing!
you take out loans under one company then transfer the assets to another company for a minimal payment leaving all of the debt behind.
This is fraud on the part of the director who should be facing criminal prosecution for this.
From the limited information that I have and not knowing all of the facts I believe that you need to wash your hands of this client before you become implicated in this.
If you feel that the insolvency practitioner is working in collusion with the business to the detriment of the employee's and creditors then you can raise the matter with their supervisory body who will investigate.
You might also want to discuss with your own supervisory body for specific advice in relation to the client.
I'm afraid, covering myself here that I'm not going to offer any more advice on this one as it's not something that I would wish to or am qualified to become involved with.
All of the above is intended only to concur that something is seriously amiss and point you in the direction of seeking professional advice from your own supervisory body.
No professional advice is intended or implied by these replies.
Kind regards and good luck,
Shaun.
-- Edited by Shamus on Thursday 11th of March 2010 05:36:43 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
