**termination with no notice - breach of contract**court case *help needed*

[BolshieBastard]

I think her plan was to empty the company's accounts before going to court.
Losing the case means closing the company.

Im not certain that will wash with the learned judge. Deliberately emptying the co accounts would be pointless as she is also a director of the co and so responsible for the financial status of the co.

Will be interesting to see how it all pans out though.

[Wanderer]

Im not certain that will wash with the learned judge. Deliberately emptying the co accounts would be pointless as she is also a director of the co and so responsible for the financial status of the co

And what will the learned judge do? Order the director to be held personally liable? Pretty unlikely unless there has been criminal misconduct, which there hasn't been in this case.

Loads of businesses go bust owing money and the creditors can't do bugger all about it.

[malvolio]

And what will the learned judge do? Order the director to be held personally liable? Pretty unlikely unless there has been criminal misconduct, which there hasn't been in this case.

Loads of businesses go bust owing money and the creditors can't do bugger all about it.

Someone's not being that clever. If the case is brought by KittyCat, rather than KittyCat and Co Ltd, then KittyCat will be liable for any award of damages and costs should she lose. If against KittyCat and Co Ltd, whose directors have demonstrably emptied the company's coffers immediately before bringing the case - which is easily demonstrated - then the directors will be done for behaving fraudulently or trading while insolvent (since CT monies will have been included unless KC is really clever and we have little evidence of that to date), and the corporate debt passed down. Either one leaves KC liable personally

Picking up another point, PCG won't touch this with a bargepole, on the facts presented to date, since the only likely outcome is to make clients more averse to using contractors that they can't get rid of without incurring significnat costs, which is not why they hrire them in the first place.

All in all, it's a bit of a buggers's muddle, isn't it...

[Wanderer]

If against KittyCat and Co Ltd, whose directors have demonstrably emptied the company's coffers immediately before bringing the case - which is easily demonstrated - then the directors will be done for behaving fraudulently or trading while insolvent (since CT monies will have been included unless KC is really clever and we have little evidence of that to date), and the corporate debt passed down. Either one leaves KC liable personally

It's an interesting case all right.

My impression is that a director could pay off their creditors (including CT to HMRC) and pay out the remaining funds as a dividend to the shareholders and would then be untouchable if the case went against them.

I know a few people who have been awarded a judgement of 10's of thousands against companies which then ceased trading. They ended up getting nothing and their legal counsel told them they were flogging a dead horse trying to pursue the ex-directors of the company even though they went on to phoenix company and were trading again under a very similar name the very next day. Apparently it's technically possible to get a company reinstated and to hold a company director liable, but the reality is that this would be very rare indeed and would happen only in serious fraud cases where there are large amounts of money (eg, millions) involved.

[centurian]

Oh, I agree it's highly unlikely. Wasn't an agency accused of doing this a few years back. Took 700K out just before company tanked - leaving contractors out of pocket - and they were told there was nothing they could do about it.

[malvolio]

Oh, I agree it's highly unlikely. Wasn't an agency accused of doing this a few years back. Took 700K out just before company tanked - leaving contractors out of pocket - and they were told there was nothing they could do about it.

Yep, and they're still trading. With the same website and 95% of the same content and all of the same business model. And people are still using them...

That's the other side of the coin, of course. All I'm describing earlier is the worst case scenario; the chances of it going like that aren't that high but it could happen. You can't guarantee you'll be able to divorce yourself totally from your Ltd Co's actions.

[prozak]

On the emptying the money from the company matter.

She isn't doing anything wrong. There is currently no debt, she is not trading whilst insolvent.

I am sure you could argue she is being a responsible director by protecting the shareholders.

[TheFaQQer]

I am sure you could argue she is being a responsible director by protecting the shareholders.

A responsible director would have taken legal advice before exposing the company to the massive risk of getting hammered for costs on the case.

To get this far without speaking to a lawyer is madness. To do so without any form of insurance is doubly so.

[prozak]

A responsible director would have taken legal advice before exposing the company to the massive risk of getting hammered for costs on the case.

To get this far without speaking to a lawyer is madness. To do so without any form of insurance is doubly so.

Yes, I considered those points.

However from a responsibility point of view shouldn't a dirctor fight to secure revenue owed?

[ASB]

Yes, I considered those points.

However from a responsibility point of view shouldn't a dirctor fight to secure revenue owed?

A directors fiduciary duty should ensure they do fight - but only on a risk weighted basis, i.e. with a reasonable prospect of success.