Puff The Magic Wagon!

iTrader: (2)

Question

A company is going down the tubes, but the intention is to sell the assets to another company, so that they can continue in another guise, free from the incumberence of previous debt.

The company that is going, has a contract that is worth a minimum of £50k and potentially a heck of a lot more - millions.

The directors negotiate with the client to move the contract to the new company, so that the new company have the benefit & turnover.

Although it is practical and makes sense, is it legal when there are creditors still seeking payment and the directors are essentially disposing of a company asset? The asset being a contract worth a lot of money.

The new company bought the physical assets for peanuts and the creditors will get an offer or a p in the £ payment

To me it stinks, but is it legal?

Luke

Good luck to them..... The law allows for stuff like this.. the rich know the law.

NotoriousREV

I think it probably is as I know it happens often, in fact my former employer was going to do it once when he was being sued for lots of money i.e. if his company lost the court case they would dissolve and reform after buying the cutomers and assets for a token value. The new company could even have the same directors, company address etc.

Diablo

Hi Puff,

Yes, its legal.

Provided that the company thats gone **** up receives value from the new company for the transfer.

The difficulty is establishing that value. Generally speaking, the calculation of value is based upon whats due to the first company at the date of transfer - if all sums due at that date have been paid, there is nothing that can be done.

Its called "Enterprise"

Of course, if newco takes on the business/assets of old co, there's a TUPE issue (see other thread) and newco has to honour your contract (written, verbal or implied) with old co.

But I'm sure I've told you this before

D
D

Puff The Magic Wagon!

iTrader: (2)

I'm sure you did but I'm looking at the timings of this happening as I think the contract was transfered before g/will assets were negotiated.

With the TUPE issue (clutching at straws) are newco still liable for my wages that have yet to be paid? Don't forget, I was made redundant 1 month before the phoenix jobby & not paid salary owed or notice. That would be nicely ironic if that is the (unlikely)case...

Or I guess I'm just a creditor

Diablo

If you could argue that your dismissal was a means to avoid newco having to adopt your contract under TUPE then yes.

Tribunals look very favourably on employees these days.

Puff The Magic Wagon!

iTrader: (2)

Hmm..

They told me the company was going to the wall, as they had internal irrecovable strife and in the present guise would be unable to attract investment, and they had no money to pay me. So, I was told that the company would be folded with the intention of trying to continue with another existing company as the front - obviously buying the assets. I was offered a contract with newco on a derisory payment (such as it was not worth doing at all with expenses etc) with the carrot that it'd get better in a few months time. I declined.

So the intention had always been to phoenix the old company.

Hmm...

Diablo

Take newco (not oldco) to a tribunal .

Only answer really.

Good luck mate

Puff The Magic Wagon!

iTrader: (2)

ROFL

I feel a threat of litigation coming on

Now where's my wife so I can get it on headed paper...