Chasing Directors of companies in Liquidation?
We often receive calls from Members/clients who have been approached by other firms who have made the claim that they can obtain payment from Directors of companies who have gone into Liquidation or Administration. Often their ‘pitch’ is that they have evidence that money has been transferred from the subject company into another company owned by a director and they can go after the director personally. When they write to confirm the upfront payment they require they are careful not to mention this ‘evidence’.
Here at CPA, we have made extensive inquiries with both insolvency experts and solicitors who have advised us of how extremely difficult it would be to prove such actions by a director. Firstly you would need to obtain irrefutable proof showing such action had taken place and that it was in breach of the relevant legislation. Secondly a High Court action would need to be instigated for a determination of the facts to be decided and a judgement made. This is a highly expensive and risky process. Successful actions are therefore understandably extremely rare.
There is also the position of the Liquidator/Administrator to consider. They are under a statutory duty to do the best they can for the creditors, both secured and unsecured, and any untoward transfer of funds etc. prior to their appointment would be glaringly obvious to them. They would act immediately to investigate the circumstances and take whatever action was required.
The basic point we are making is ‘if it sounds too good to be true, it probably is!’
If you receive an approach like this, please feel free to call us to discuss it further.
Cris Shirley
Customer Service Manager
24th July 2017