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Senior Partner
Senior Partner, Solicitor
Category: UK Bankruptcy Law
Satisfied Customers: 13323
Experience:  30 years in commercial law
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My mother has preferential shares in my sisters ltd business,

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My mother has preferential shares in my sisters ltd business, which is now in CVA. I am registered POA for my mother. I have requested statement of my mothers shares with no reply.

The business is now trading under a different name but shares not transferred.
The cva administrator is intending to wind the business up. I would like to prevent this happening. I believe the business has stripped the assets from the old business into their new business. Therefore I want to prevent this liquidation on the grounds of it being a deliberate and fraudulent ploy the remove my mother as a creditor.

Can I prevent the liquidation? How could I challenge the liquidation, what grounds are needed for such a challenge? I am still within 21 days of receiving the report for this compulsory liquidation.
Hi is your mother a creditor or simply a shareholder?

has the administrator petitioned to wind it up if so on what grounds - presumably Insolvency?

If there is a CVA there must have been an agreement with creditors who will have had some oversight on what the business was sold for assuming is ha been sold. Presumably the business is now being carried on by a new company?
Customer: replied 4 years ago.

Mothers investment is held as preferential shares, no voting rights.


 


Yes CVA supervisor petitioned to wind up and liquidate, to be heard mid Dec, reason was failure to pay as per CVA agreement for back tax, plus current tax and none submission of accounts. Not sure on insolvency, no accounts submitted since May 2010. All trade now appears to be through new business name.


 


CVA was agreement with creditors, this was just tax office. Business not sold. But new business is in the same premises, same trade, same directors, same phone numbers etc.. The new business is a replica of old business, just a new name.

Ok thanks. Clearly the company is insolvent. Unfortunately if your mother is a shareholder then the chances are that she has lost all her money . even preference shareholders rank behind the creditors and the revenue have priority over the ordinary creditors.

It is not unusual for the directors to start a Phoenix Company but if the company goes into compulsory liquidation the liquidator who will be wholly independent is obliged to report in the conduct of the directors and I frankly doubt if in the circumstances you describe the directors will have been able to buy assets at below market value.

Certainly you can appear at the winding up but if HMRC is one of the creditors there is no chance you will be able to prevent the liquidation unless you plan to invest enough money to pay the creditors which I would expect is not the case

I am sorry to give you such bad news but there it is.
Customer: replied 4 years ago.

Surely the directors can not continue exactly as before, same staff, same offices, same everything after transferring all assets of first company into second company?


Surely they can not use the bankruptcy of first company to deliberately get rid of a £300,000 plus shareholder?

No they cannot transfer the business to defeat the rights of a shareholder. However if the compnay has gine broke they can try and rescue the businees. But if the company is insolvent the shareholder has already lost their money. I am afraid it happens all the time. Whether the phoenix business has been legitimately set up can be investigated and probably will be by the liquidator. A shareholder has no right over the underlying assets however. It is too late now but if your mother out up £300k to fund the business she would have been better advised to advance it as a secured loan not ad preference shares .

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