Advice needed for company gone into administration

[alfabeat]

Could do with some advice here for a friend.

She has paid £2k to an events company on the 21st May 2019 by bank transfer for a charity funday event (supply of bouncy castles, events, rides etc).

Just found out today by chance, that said limited company went into administration on the 12th June 2019.

Administrators have been appointed and they will be in touch in due course. Unlikely to be any refunds.

Digging around shows that the company that went into administration has two directors. One of the directors, incorporated a new business on the 19th June, which by the sound of things is doing a very similar thing to the company in administration.

I have advised her to get in touch with the director, and hopefully (but unlikely) appeal to her nature to honour (maybe through her new business, which I assume bought the bouncy assets for a song just before administration) the booking or refund the money, partially or in full.

Is there are other option open to her? Isn't it illegal for a director to keep a company trading knowing it is on the brink of administration? 21st May to 12th June is not a long time...and could be argued that a director should know the financial situation. Could any pressure be put on the director as an individual from a legal point of view?

She cannot afford to lose the £2k. And will have to cancel the funday.

Thanks!

[Zetec-S]

alfabeat said:

I have advised her to get in touch with the director, and hopefully (but unlikely) appeal to her nature to honour (maybe through her new business, which I assume bought the bouncy assets for a song just before administration) the booking or refund the money, partially or in full.

I'd be shocked if she got anywhere with that. I hate to say it but I don't think she's seeing the money again. Would love to be proved wrong, but unfortunately it's far too easy for these Phoenix companies and their unscrupulous owners to keep ripping people off.

Maybe a quick search on companies house to see if the directors have a history of this sort of thing? You could complain to the Insolvency Service, but again I doubt that would get very far.

https://www.gov.uk/government/publications/phoenix...

[alfabeat]

Thanks.

I know its a long shot, but she has to try something. Can't just walk away from it without trying. Just wondering if there is a legal angle regarding the wrongful trading side of things, she can use to put pressure on the director...? Clutching at straws?

[Alpinestars]

She will be an unsecured creditor.

Who appointed the administrator?

[loafer123]

I wonder whether you could argue that the director was trading whilst insolvent when taking the original money?

If so, it might incentivise him to help...

[alfabeat]

loafer123 said:

I wonder whether you could argue that the director was trading whilst insolvent when taking the original money?

If so, it might incentivise him to help...

I think that's the angle she should look at. Does anyone have any experience of this?

[Alpinestars]

alfabeat said:

I think that's the angle she should look at. Does anyone have any experience of this?

Who appointed the administrator?

[loafer123]

alfabeat said:

loafer123 said:

I wonder whether you could argue that the director was trading whilst insolvent when taking the original money?

If so, it might incentivise him to help...

I think that's the angle she should look at. Does anyone have any experience of this?

It is more of a potential threat than anything else, but the fact that it has significant financial and personal consequences is what gives it leverage in a negotiation.

[dazwalsh]

Its an absolute disgrace how someone can wind up a company one day (taking with them the money from bookings) and start a new compny the next day doing the same thing. They should be banned for x years for that sort of behaviour.

[Starfighter]

What became of the assets they OldCo had? If these were sold on to NewCo then how is the Administrator darling with that?

[alfabeat]

This is all she has been told: (great spelling!)

Hayley Simmons and Karyn Jones were appointed Administrators of the company on the afternoon of 12 June 2019. Unfortunately the company has been forced to ceased trading and the premises are closed. The company is no longer in a positon to deliver your order of to take any more orders.
We will be writing to all creditors to notify them of our appointment as soon as possible and will be preparing a report to all creditors on the company’s affairs which will be sent out within 8 weeks. If you consider yourself to be a creditors please email [e-mail] with details of your order and the amount you paid and contact details and we will add you to the list of creditors. If you paid by credit card and the order was over £100 you should be able to reclaim the amount from your credit card company and you should discuss this with them direct. If have any queries and you would like someone to call you back please either email or telephone [phone] and give your contact details and the nature of your query and someone will get back to you within 3 working days.
The Administrators have instructed agents and are looking for a buyer for the business/assets of the company.
IMPORTANT NOTICE – Directors and staff acting as Administrative Receivers and Administrators act as agents and contract without personal liability. Where a company is in Administration, the affairs, business and property of the company are being managed by the Joint Administrators, who act as agents of the company.

[Alpinestars]

Sounds like an insolvent administration. The administrators will look into the conduct of the directors, but it’s a long shot that they will be done for wrongful trading, where they might need to make good creditor claims.

Here’s the relevant law.

Pre administration

http://www.legislation.gov.uk/ukpga/1986/45/sectio...

During administration

http://www.legislation.gov.uk/ukpga/1986/45/sectio...

And fraudulent trading during administration.

http://www.legislation.gov.uk/ukpga/1986/45/sectio...

[Storer]

For anything like this I would use a credit card. It gives you a decent level of security.

I have used this approach for my input into my son’s wedding recently. At least the funds will be available if the venue fails before next weekend.

Just about every other large expenditure I make is done through a buying group and nothing is paid for until after delivery.

Money is too hard to come by to risk it’s loss.