I Won My Tribunal But They Won't Pay

[Pusillanimous]

Have you looked up the director/s' name/s on Comapnies House to see what other companies they have? You might be able to download their last filed annual return and get an idea of the net assets and whether there would be enough left over to pay you. Unfortunately, there are many rogue directors who set up one company after another and it can take years to have them investigated and disqualified. If they have diddled you, then there are likely to be other creditors in the same boat. Contact HMRC and if there is tax owing to them (for example, from your £17,000 payout, if it was awarded in payment for your loss of income) then they can put the compulsory wind up petition in and bear the cost of it. HMRC make the most frequent wind up petitions, as they are often owed tax.

[Hair Bear]

Have you looked up the director/s' name/s on Comapnies House to see what other companies they have? You might be able to download their last filed annual return and get an idea of the net assets and whether there would be enough left over to pay you. Unfortunately, there are many rogue directors who set up one company after another and it can take years to have them investigated and disqualified. If they have diddled you, then there are likely to be other creditors in the same boat. Contact HMRC and if there is tax owing to them (for example, from your £17,000 payout, if it was awarded in payment for your loss of income) then they can put the compulsory wind up petition in and bear the cost of it. HMRC make the most frequent wind up petitions, as they are often owed tax.

 

Thanks. I'll digest properly later today, but for now...

Yes, the director (there was two, but the other came and went briefly, though is still linked) has had his fingers in many pies, and still has.

Edited October 23, 2013 by Hair Bear

[steampowered]

I've edited your post to remove the name of the Director, for protection of yourself and CAG. Please don't take offence at this - remember CAG is a public forum so always worth being a bit careful about what personally identifiable information is posted, a bit frustrating I know but it shouldn't affect the advice given.

[Hair Bear]

I've edited your post to remove the name of the Director, for protection of yourself and CAG. Please don't take offence at this - remember CAG is a public forum so always worth being a bit careful about what personally identifiable information is posted, a bit frustrating I know but it shouldn't affect the advice given.

 

No offence whatsoever - my mistake and apologies all round, I'm just not used to these things and wasn't thinking clearly. Will attempt to get back to being diplomatic, and thanks for putting me right. I would never intentionally harm this fantastic site and its more-than-generous posters, not least your good self.

[steampowered]

No offence whatsoever - my mistake and apologies all round, I'm just not used to these things and wasn't thinking clearly. Will attempt to get back to being diplomatic, and thanks for putting me right. I would never intentionally harm this fantastic site and its more-than-generous posters, not least your good self.

No worries

[Hair Bear]

No worries

 

Just wondering what you thought about Pusillanimous's last contribution? Ultimately, I'd prefer to have a clear start-to-finish strategy before I begin contacting people, as I'm worried my lack of knowhow will have me doing the wrong thing with the wrong information

[Hair Bear]

The solicitor is suggesting the course of action described in post 14. First stage is to apply for the company to be restored to the register. Second stage is to apply for a creditor's winding-up and appoint an insolvency practitioner. Third stage is for the IP to investigate the company's affairs. If there was a transaction at an undervalue (i.e. assets being moved into the new company) the liquidator should be able to get that reversed.

 

Let me get back to you on the non-notification thing.

 

Sorry to bother you, just wondering if you've managed to think up anything regarding this matter?

[steampowered]

I've given this some thought over the past few days. There are basically two options here:

 

1) Apply for the company to be restored to the register, have liquidators appointed, get the liquidators

 

The reason why you would do this is because most of the general anti-avoidance powers under the Insolvency Act in a situation like this would only be actionable by liquidators, not creditors. I pondered whether you could catch him by enforcing the statutory Director's duties, but as a creditor you do not have standing to bring the challenge. I also had a think about whether you might be able to use a common law action for fraud/breach of statutory duty or the like, but there is not much precedent for this and there are other problems with bringing an action like this. I had a think about whether non-notification to creditors for the dissolution would have civil law implications. There is a criminal offence but I couldn't find evidence of people bringing civil cases off the back of that. You can threaten to report him for the offence (and should probably just go ahead and report anyway) but not sure this will help you get any cash.

 

Getting the company restored to the register would cost you 150 or so in court fees and potentially a bit more in the government's costs, but ultimately it is not a complicated complex and I think is something you can do yourself without a solicitor. Refer to the Treasury Solicitor's guide with precedent documents at http://www.tsol.gov.uk/Publications/Scheme_Publications/company_restoration_Oct_2011.pdf.

 

You would then have the company wound-up (or seek an order that this is done when you have the company restored). You would then appoint a liquidator who has the power to question and require information from the Director, and unwind transactions designed to defraud creditors or challenge wrongful trading and the like. The problem is that you would need to find a willing insolvency practitioner, and as the company's assets are now gone I think they would want you to pay their fees.

 

2) Sue the director personally under section 423 Insolvency Act 1986

 

There is a general debt anti-avoidance provision under the Insolvency Act, see http://www.legislation.gov.uk/ukpga/1986/45/section/423. You could use this to ask the court to make an order that the Director is personally liable to you for the cash.

 

The problem is that you would need to identify a transaction entered into at an undervalue. It sounds likely that there was a transaction like this moving the company's assets from one company to another, but you don't have enough information to be sure. Essentially you would need to begin your court claim against the Director personally on the basis of deductions made from the circumstances, and would have to wait until you reach the disclosure stage to try and get an order that he produce documents relating to the dissolution and relating to the asset transfer (such as bank statements). You would then have to use those documents to nail down your claim.

 

One complication is that if the original company was genuinely insolvent, then even though the Director did not follow the proper procedures, the business wasn't worth anything, so being paid the value of the asset transfer would not get you much cash. The other complications it that there will be other creditors, so the court may order that the company is restored and liquidated properly (although if the asset transfer was reversed and assets returned to the company at least these would be available to meet the liquidator's costs). The Insolvency Act actually says a 423 application is to be treated as being made on behalf of every 'victim' of the transaction, so if it becomes apparent to the court that there are other creditors you may need to take their interests into account.

 

The risk you run is that none of this would be small claims. If you are unsuccessful or you withdraw your claim, you will be liable for his legal costs.

 

None of this is simple. No doubt it would cost several thousand to get a solicitor to do this for you, although ultimately he would be liable for your legal costs if you win. However, if there has been a genuine transaction defrauding creditors here I think it is doable by a dedicated litigant in person who puts in the hours to understand the court process and has the patience to see it through, plus if successful you would expect to get costs at the litigant in person rate (18 an hour or so for the time you put in)... I'll help you if this what you want to do. For me, the key question you need to answer before deciding whether a s423 app is worth it is whether you are confident that there was a transfer of valuable, solvent assets from the dissolved company to another company.

[Pusillanimous]

Thanks for your research steampowered, which I think will be of help to others, besides the OP. I should think there are many creditors - mainly suppliers and perhaps, in insolvent cases, HMRC - out there with their noses similarly out of joint by this person/company, and others like it.

 

There are many small insolvency practitioners, often one man and a dog partnerships, who you could probably initially consult to find out the likely costs, the prospect of success in recouping the monies owed to you and the various options. Google it.

 

As it sounds like the company was solvent at the time of the DS01 and they wound it up to avoid paying you, it is possible there other other creditors involved. If so, you can try for a creditors meeting to appoint a practitioner and have the company restored and apply for a compulsory liquidation of it, together with a compulsory bankruptcy of the disqualified director (I hope I am not getting mixed up with another case!) through the High Court who would appoint an official receiver, and or a liquidator/trustee on their roll. The aim being to liquidate the misappropriated assets and pay the creditors.

 

Also, off the top of my head, have you tried the tribunal's enforcement agency for advice? Think about your local press, perhaps, to tell your sad story?

Edited October 31, 2013 by Pusillanimous

[Hair Bear]

Crikey, Streampower/Pusillanimous (and earlier smokejumper, emmzzi & SuperVillian): if ever I feel like all the good guys have disappeared, I will think back to your fantastic efforts to help me. Wow. I feel very, very humbled indeed. THANK YOU SO MUCH!

 

During this past week or so I have been convinced by Companies House that they are more than happy to investigate this director. I haven't given them any names, but in describing the events that unfolded, the person I have been dealing with was fairly chomping at the bit for me to supply him with names.

 

Hence, what I decided to do, was give this director the opportunity to give me some of the money (since it's unlikely I'll ever see any of it, I see the asking of a much-reduced amount the best way - despite the bar's turnover being £1,000,000 a year). I will forward to him the below note, which is still in draft mode. I'll give him a couple of weeks to pay, after which I will definitely be going down another route - i.e. all my information to Companies House, the tax office, the press, the council, and anyone else I can think of. I will also go over the options of attempting to get the money back, all of which you seem to have listed (I need more time to digest everything - remember, I'm just a 'not too smart' doorman). Firstly, though, this is my draft letter. Please feel free to pick holes in it/word it better/tell me I'm an idiot and should knew better. Also, Steampower, I'm not sure how to make the [copied] letter font larger, can you help with that?

 

'Without Prejudice

 

Dear Mr X

Having gone through the time, effort and stress of a tribunal, it seems that you still have no intention of compensating me, despite the outcome of that tribunal insisting that you must. I want to make it clear that the efforts you have made to avoid having to pay me what I was always entitled to are not acceptable, and will not be accepted.

 

According to Companies House...

“A limited company can request to be closed/dissolved...providing that it meets all of the following requirements:

Not traded within the last 3 months

Not changed the company name within the last 3 months

Is not subject to any legal proceedings, current or proposed

Has not made a disposal for value of property or rights”

 

You have certainly breached at least one of those rules, bearing in mind you were most definitely subject to a legal proceeding – my employment Tribunal (I should also point out that you failed to inform me that you were applying to be struck off, which you were required to do within seven days of your application).The pursuit of frankly illegal means to avoid recompensing me strikes me as being a severely false economy, and I wonder if you are aware of the consequences of breaching these rules: a maximum fifteen-year disqualification from being acompany director, in addition to a fine of up to £5,000 and a prison term of up to seven years. I would expect you to be aware of this, as the founding and closing of limited companies is clearly something you are used to: at least ten companies (nine limited) in total according to public record, some of which are still in operation.

 

One company that isn’t still operative is AAA Limited, though of course this is just in name, isn’t it? With AAA being dissolved in November 2011, the "new" operator of the bar became BBB Limited, but this was not a simple case of one company taking over the business from another – the latter company having your surname, and being originally registered at the same address as AAA. The fact that the company changed its address and later applied to be struck off does not erase the coincidence, or your personal involvement, or its implications. There is no doubt whatsoever that you have remained the principal operator of the bar from 2010 onwards, especially since the next “new” company taking over the bar's helm was CCC Limited, and its registered director is you. This is all on file, not least XXX City Council’s licensing department, who list BBB Ltd as the licensee from April 2012 until February 2013, when the licence was taken over (before my final Tribunal, by the way) by CCC Ltd.

 

This information – a drop in the ocean to the many facts I have collated, including statements from employees that leave no doubt about your role – I have obtained while preparing a civil case, by which to obtain the recompense to which I amentitled. I will also be handing over copies of all documentation to Companies House, the tax office, the council, the press, and other bodies.

 

There is, however, an alternative. At no time did I wish to see your role as the new owner of the bar to be challenged, or to cause you to incur damaging costs as a result of dispensing with my services. All I ever wanted was a fair level of redundancy – the Tribunal's award of over £16,000 is what happens when one ends up in court. Now that I’m dealing personally with this, my wishes remain as they have always been: to obtain a reasonable redundancy settlement, which along with my costs works out to be £3,900.

 

My recommendation would be that you pay me this figure before the 13th November 2013, as after that date it will be impossible for me to halt the aforementioned proceedings. Please contact me at ...'

 

All thoughts are welcome

Edited October 31, 2013 by Hair Bear

[steampowered]

Looks good. I think there are a few other points to be made:

• Remember he is not a lawyer and will not know what the Companies Act says. He is not going to take your word for it. It may be useful to attach the sections of the Companies Act I have pointed you to as an Appendix to the letter.
  
• You've covered the point about when a company may or may not be dissolved. You haven't covered the point about the strict obligation on him personally to notify all creditors. Refer to http://www.legislation.gov.uk/ukpga/2006/46/section/1006. I would directly quote the wording from sub-sections 6 and 7 which are self-explanatory.
  
• I would include a statement that transfer of the bar was a transaction designed to defraud creditors contrary to section 423 Insolvency Act 1986. Mention that the options open to you include (1) arranging for the company to be restored to the register and an insolvency practitioner appointed to investigate its affairs and (2) seeking an order that the Director and/or the new company is liable for the full amount. State that either approach would result in the debt increasing exponentionally, since he would be liable for your legal costs.
  

Just as a general thing, parts of that letter were designed to make you feel good, not to get you the money. I always think it is better to stick to the facts and leave out statements like "is clearly something you are used to", I think this will just make him defensive and less likely to settle, but your call.

[SuperVillain]

I think your letter was good and I'd agree with the suggestions above.

 

I think the fella has taken more than a few questionable actions and highlighting these and their consequences should make him see sense without the feel good bits - although it's an emotive situation and I can see where you're coming from.

[Hair Bear]

Thanks SuperVillian - you need to rename yourself SuperHero in my book

[Hair Bear]

Looks good. I think there are a few other points to be made:

• Remember he is not a lawyer and will not know what the Companies Act says. He is not going to take your word for it. It may be useful to attach the sections of the Companies Act I have pointed you to as an Appendix to the letter.
  
• You've covered the point about when a company may or may not be dissolved. You haven't covered the point about the strict obligation on him personally to notify all creditors. Refer to http://www.legislation.gov.uk/ukpga/2006/46/section/1006. I would directly quote the wording from sub-sections 6 and 7 which are self-explanatory.
  
• I would include a statement that transfer of the bar was a transaction designed to defraud creditors contrary to section 423 Insolvency Act 1986. Mention that the options open to you include (1) arranging for the company to be restored to the register and an insolvency practitioner appointed to investigate its affairs and (2) seeking an order that the Director and/or the new company is liable for the full amount. State that either approach would result in the debt increasing exponentionally, since he would be liable for your legal costs.
  

Just as a general thing, parts of that letter were designed to make you feel good, not to get you the money. I always think it is better to stick to the facts and leave out statements like "is clearly something you are used to", I think this will just make him defensive and less likely to settle, but your call.

 

Thanks Steampower. I'll do as you ask regarding the quotes, but just to make you aware: he always works in conjunction with a business partner who is very clued up with legal aspects. I had this in mind when I wrote the letter, so at the time preferred to keep it as short as possible without adding the legal bits, but now you've highlighted it, I do feel it best to follow your recommendations. Also: regarding "is clearly something you are used to". Are there any other lines that come across as too personal and need to be chopped? I agree that I should stick to the facts, but sometimes you need other people to see what you can't.

[SuperVillain]

Thanks SuperVillian - you need to rename yourself SuperHero in my book

 

Hah never! (Tis a reference to my footballing allegiance )

[Hair Bear]

Hah never! (Tis a reference to my footballing allegiance )

 

I quickly back down - allegiance to one's football team is definitely sacred!!!

[Hair Bear]

Dear A-team,

 

Just revamping the letter as suggested and hopefully it will be away today. The thing is, a friend suggested I alter this part: "All I ever wanted was a fair level of redundancy – the Tribunal's award of over £16,000 is what happens when one ends up in court. Now that I’m dealing personally with this, my wishes remain as they have always been: to obtain a reasonable redundancy settlement, which along with my costs works out to be £3,900." He says...

 

"My only doubt at this point would be that your figure of £3,900 looks very low. Reading that from the point of view of your adversary, it would make me think "He's asking for less than 25% of what a court awarded him? Hmm... he knows he's going to get ****-all if I ignore him". I think I would say 'I am prepared to consider a reasonable offer'. "

 

My mate is far smarter than I am but he isn't a legal eagle. I'd be grateful for suggestions on which approach I should take, asking for money or an offer? Thanks in advance.

[steampowered]

Thanks Steampower. I'll do as you ask regarding the quotes, but just to make you aware: he always works in conjunction with a business partner who is very clued up with legal aspects. I had this in mind when I wrote the letter, so at the time preferred to keep it as short as possible without adding the legal bits, but now you've highlighted it, I do feel it best to follow your recommendations. Also: regarding "is clearly something you are used to". Are there any other lines that come across as too personal and need to be chopped? I agree that I should stick to the facts, but sometimes you need other people to see what you can't.

 

"I will also be handing over copies of all documentation to Companies House, the tax office, the council, the press, and other bodies." - I would chop this. A scatter-gun approach loses focus.

Unless his business partner is a qualified lawyer (in fact even if he is) it isn't likely he will be familiar with the ins-and-outs of the dissolution process or the Insolvency Act so I think best to include the legal bits. I think most legally minded people understand basic things like the principle of separate corporate liability but not many understand the options available when that is abused.

My mate is far smarter than I am but he isn't a legal eagle. I'd be grateful for suggestions on which approach I should take, asking for money or an offer? Thanks in advance.

 

This isn't really a legal issue, more a psychological one. Personally I would keep the original idea of offering to settle for £3,900 as there is a convincing story behind why you are offering that number. But its up to you.

[Hair Bear]

"I will also be handing over copies of all documentation to Companies House, the tax office, the council, the press, and other bodies." - I would chop this. A scatter-gun approach loses focus.

OK, done.

 

This isn't really a legal issue, more a psychological one. Personally I would keep the original idea of offering to settle for £3,900 as there is a convincing story behind why you are offering that number. But its up to you.

 

I'm with you on this one, thanks.

[Hair Bear]

Regarding: You've covered the point about when a company may or may not be dissolved. You haven't covered the point about the strict obligation on him personally to notify all creditors.

 

I put it in brackets...

"You have certainly breached at least one of those rules, bearing in mind you were most definitely subject to a legal proceeding – my employment Tribunal (I should also point out that you failed to inform me that you were applying to be struck off, which you were required to do within seven days of your application)."

 

I didn't make much of it because I was worried that he saw the term "creditor" and decided that I wasn't one (he may take the view that because, at the time of his applying to be struck off, the decision hadn't yet gone against him, then technically speaking I can't yet have been classified as actually being a creditor. If I'm honest, in terms of scaring him into paying me £3,900, this remains my worry, and I can't help feeling that if I'm to quote Companies House rules as suggested, I should also relate some part of their policy that classifies me as a creditor.

[steampowered]

I didn't make much of it because I was worried that he saw the term "creditor" and decided that I wasn't one (he may take the view that because, at the time of his applying to be struck off, the decision hadn't yet gone against him, then technically speaking I can't yet have been classified as actually being a creditor. If I'm honest, in terms of scaring him into paying me £3,900, this remains my worry, and I can't help feeling that if I'm to quote Companies House rules as suggested, I should also relate some part of their policy that classifies me as a creditor.

 

I think this argument is spurious at best. Liability for redundancy pay arises when it should have originally been paid, and hence you were a creditor at this point. You don't have to go to Tribunal in order for something to be treated as a liability.

 

Also see http://www.legislation.gov.uk/ukpga/2006/46/section/1011

 

1011Meaning of “creditor”

In this Chapter “creditor” includes a contingent or prospective creditor.

[Hair Bear]

I think this argument is spurious at best. Liability for redundancy pay arises when it should have originally been paid, and hence you were a creditor at this point. You don't have to go to Tribunal in order for something to be treated as a liability.

 

Also see http://www.legislation.gov.uk/ukpga/2006/46/section/1011

 

1011Meaning of “creditor”

In this Chapter “creditor” includes a contingent or prospective creditor.

 

Thanks for rescuing me ...again

[Hair Bear]

The reason I originally went for this approach...

 

"I will also be handing over copies of all documentation to Companies House, the tax office, the council, the press, and other bodies"

...and not...

"theoptions open to me include (1) arranging for the company to be restored to theregister and an insolvency practitioner appointed to investigate its affairsand (2) seeking an order that the Director and/or the new company is liable forthe full amount. Either approach would result in the debt increasingexponentially, since you will be liable for your legal costs"

...is because I guessed he would probably believe the first, but not the second. He assumes - correctly - that I don't have the money to go down the insolvency route, but knows I don't need capital to have the powers that be crawling all over him. The ultimate aim of the letter is to scare him into making a payment. Given this, do you still feel I should abandon the 'scatter gun' approach and stick to the 'insolvency' one, or on reflection should I just re-word the scatter gun approach better?

[steampowered]

The reason I think it loses credibility is because you are just naming random bodies ... I don't see why there is a reason to report him to the tax office or the council. Maybe better just to say the relevant authorities.

[Hair Bear]

The reason I think it loses credibility is because you are just naming random bodies ... I don't see why there is a reason to report him to the tax office or the council. Maybe better just to say the relevant authorities.

 

Yes, that's better. Thanks.