Legal advice please

AppyAddick

Good evening, on the off chance that there are any legal bods on here that can offer some advice i have the following dilemma:

My company deal with a LTD company whom i have just received notification have a winding up order against them from HMRC. As this company owe us no money this should not be a problem.

However it seems one of the directors of the company being wound up is also the owner of another company that we deal with, is there a risk to my business here?

Many thanks for any advice.

Lincsaddick

No risk if you deal with him on a C O D basis .. directors of one failed company often have a nasty penchant for appearing on the letterheads of other potentially 'dodgy' outfits .. especially MPs and members of the 'aristocracy'

legaladdick

The correct legal position is that a ltd company is a 'person' in its own right. This is a legal fiction going back a couple of centuries which enables the 'person' to trade even when individual directors leave. Unless there is a fraud, by any individual director, the company may be wound up and a new phoenix company rises, leaving creditors to scramble for any assets which may be left. You don't say what involvement this director had with the failed company - was he the major or a minor shareholder?
In your case, you refer to the director being 'the owner of another company', by which I assume he is a shareholder (possibly the major shareholder). If that is the case, you may well be concerned that the business plan which failed the first company will similarly fail the second. The risk to your business will depend on a number of factors, principally, the extent to which your business is exposed if that other company goes into liquidation. You may wish to consider whether you agree any further lines of credit, rather than demanding cash.

Good luck!

JT

Legal Addick

legaladdick

JT ?

Off_it

Good evening, on the off chance that there are any legal bods on here that can offer some advice i have the following dilemma:

My company deal with a LTD company whom i have just received notification have a winding up order against them from HMRC. As this company owe us no money this should not be a problem.

However it seems one of the directors of the company being wound up is also the owner of another company that we deal with, is there a risk to my business here?

Many thanks for any advice.

There's probably no direct risk to your business, well, no more than with any other customer, but if this first business has gone down owing HMRC money then they CAN make life extremely difficult for any other connected businesses - even to the extent of effectively stopping them trading.

Very rarely happens though, but I would say there definitely is an increased risk to you so you maybe want to have a good think about the credit terms you offer them.

Good luck.

cafcfan

Just a thought - the two companies with the common director - do they conduct business with each other? If so it is possible that Company A's potential liquidation may have an adverse impact on Company B if Company B is either a creditor or debtor of Company A.

Addicted

Should be fine as the other company will be considered a separate legal entity thanks to the 'corporate veil'. As LA says however it would be prudent to reduce or even cease offering credit terms for at least the short term until you're sure how things will pan out.

Depending on the size of your company you may find it worthwhile to invest in some credit software. We use RiskDisk here which is nice and simple.

If you want me to check out this other company send me a PM with their name and I'll take a quick peek for you.