Forum Moderators: buckworks
I supplied a UK Ltd company but since then a different person has now bought the business. They claim they do not owe the old invoices of the old owner. Surely the person that bought the business gets the assets but owes the old debts? Is this right?
Debt simply cannot disappear with a change of ownership.
Call your accountants.
Some people only buy the assets of the company, with the old owner assuming the responsibility for the debt.
This is even more complicated, as it is a Limited Company, once again see your accountant.
So how does that work if you don't know where the old owner is and the new owner is not even co-operating with bills made to him? Is this a loop-hole or would Companies House help?
At the moment we don't have a qualified accountant in the company or even external as we rarely have problems and our tax issues are very straightforward. I'll have to see if we can get some legal advice from Citizens Advice or somewhere.
New owner, no matter what the business form, should be responsible for the old debts if it is truly the same business.
Better still file a CCJ with county court and threaten to bankrupt them
As it says on the HMRC website, A Limited COmpany is a seperate legal identity to a director of the company. In that case, surely it doesn't matter, who ordered the goods, as they were invoiced to the company, and not a person.
No doubt the new owner will still be trying to sell the goods on, despite the fact that (according to him) he doesn't own them.
Or bring a bankruptcy action in the first place. They'll be expecting to be sued, they won't be expecting to get wound up.
Lol. That doesn't really have the same effect this side of the pond though.
In UK law a business is a separate legal entity and, as such, transfer of ownership does not negate debts previously incurred. If the company was trading normally then there is no way in which the new owner could have bought the company without taking on the liabilities (including the money you are owed).
If the company was in recievership/administration then there are methods of reducing or cancelling debts, but there are rules as to how this is done and you, as a creditor, should have been notified of such proceedings. If it was the case that administrative proceedings were in place and you were not consulted then you may have to contact the administrators for recourse.
The comment on filing for insolvency is very good advice. If you are owed £750 or more then it is very easy to go through the motions that would result in an involuntary/compulsary insolvency. Most companies will pay up when threatened with this, it will end your relationship with them but is very effective as a last resort. In theory it would be possible to put any business in the UK into temporary insolvency (including the very largest) if you make a claim for more than £750 and they do not contest it. Their assets would be frozen until the debt is paid, if the cannot pay they would be wound up.
You need to establish the exact circumstances of what happened, if the new owner refuses to pay up (and in reality it is the business that does not pay, not the owner) then you should ask them for their reasoning, this should lead you to the administration order (which has to be granted by a court so it is not usually a voluntary 'convenient' measure). You will probably find that it has been a smokescreen as very few companies are worth enough to rescue fully when they have gone as far as administration, often it's only parts of the business that are sold off.
Call their bluff, you have nothing to lose.
Lol. That doesn't really have the same effect this side of the pond though.
I'm in the UK.
Starting bankruptcy proceedings instead of suing is a trick taught to me by a QC (thats a posh lawyer) I dated many years ago. I threatened CJ with it once. Man, that replacement check was in the post fast..
Anyone who takes up that suggestion has to pay me $1500 per hour :)
He also taught me Mareva injunctions, to freeze funds.
Starting bankruptcy proceedings instead of suing is a trick taught to me by a QC (thats a posh lawyer) I dated many years ago. I threatened CJ with it once. Man, that replacement check was in the post fast..
I'll bear that in mind for future reference. I had no idea you could just start bankruptcy preceedings against a company, although if they refuse to pay you, it does make a lot of sense. If they aren't paying you, maybe they can't pay you,they can't pay as they have no money, no money = as good as bankrupt.
They are still a currently active company (although Companies House states their accounts are overdue but the status states 'Active - Proposal to strike off').
They owe us money for an order before the new owner and after. They attempted another order but we refused - they sent us a cheque for the newer order. We still refused to supply because of the old outstanding invoice against their company name. He immediately claimed he stopped the cheque. We haven't tried to bank it.
Following advice here, we are going to follow legal action through the small claims court. Thanks for all the advice, I'll let you know what the court thinks of the situation.
