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Alex J.
Alex J., Solicitor
Category: UK Bankruptcy Law
Satisfied Customers: 2692
Experience:  2 Years Insolvency Litigation
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Im an unsecured creditor (sole trader contractor) to a firm who went through a pre-pack in

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Im an unsecured creditor (sole trader contractor) to a firm who went through a pre-pack in February this year. The new owner bought the company at a knock down price and has just this week put the company into a CVA after promising payment of old debt on goodwill to string us contractors along and allowing new company debt to build up. Can he put the company into a CVA after less than 5 months with the prospect of the loss of 140 permanent jobs (half the workforce) surely the purpose of the administration was to save the company and jobs not to allow a guy to make a quick buck stripping the business? Also a lot of stock has been removed from the premises over the last few months. Thanks
Submitted: 1 year ago.
Category: UK Bankruptcy Law
Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

When the pre pack was done did the new owner agree with the administrator to take over the debts?
Did you agree for your debt to be transferred to new co?

Kind regards

AJ
Customer: replied 1 year ago.
No it was all on a goodwill basis. I'm more interested in the process of the cva. The administration was supposed to save the company the new owner is just stripping away assets and jobs. The company was supposed to be profitable after the bank debt was cleared in the administration but it appears the new owner has run up debts in 5 months and now needs a cva. It's not exactly turned into a rescue package and doesn't seem to fit with the criteria for the original administration
Expert:  Alex J. replied 1 year ago.
Hi

Thank you to clarify it is the new company that has gone subsequently gone into CVA?

Have you been given an opportunity to vote on the CVA?

Kind regards

AJ
Customer: replied 1 year ago.
Hi yes its the new company entering cva. I will only have a tiny percentage vote. Meeting of creditors still TBA. Thanks
Customer: replied 1 year ago.
Hi I did reply yesterday but it hasn't registered

It is the new company in the cva

The creditor meeting and vote are soon but if I attend and vote against proposals I will lose my work and any possibility of being treated preferential as well as the pie in the sky promises of goodwill payments of the old company debt.

Thanks
Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

Sorry for my delayed response I have limited Internet access until later this morning.

What is the CVA offering is it 100% of the debt?

Did you receive anything in writing to say that newco would be responsible for your debt?

Did you register your debt with old co and the administrator?

Kind regards

AJ
Customer: replied 1 year ago.


CVA offers 35p in the pound for new co debt.


 


I had nothing in writing from the new co regarding old co debt - was a verbal 'goodwill' agreement to keep operationally important sub-contract staff working going forwards.


 


The old debt was registered with administrators but this is long gone - I will see about £50 of £6000 in a few months 'maybe' is what they told me.


 


 


What I am trying to get at is the legality of this new owner buying the company at 10% of book value to save the jobs / work and then within 5 months entering into a CVA. Its not within the spirit of the agreement with the administrators / the spirit of the law at all so far as I can see.


 


 


Feel free to tell me Im wasting my time as this appears to be the case.


 


There is obviously no protection for workers in my situation from the law. There is also clearly a massive area open for abuse by unscrupulous businesses within these pre-pack admins.


 


 


Maybe I should just sign on the dole as sine 12/2/2013 I have had 50% of my income stolen by 2 unscrupulous businesses trading under the same name. I simply cant believe there is nothing I can do.


 


 


 

Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

35p in the pound sounds like a good deal.

The problem you have is that this new buyer has bought the business at arms length at a discount. The person to blame would be the administrator for not acting in the best interest of the creditor.

Was the buyer in anyway connected to old co?

Kind regards

AJ
Customer: replied 1 year ago.


The buyer was not directly connected to the company prior to sale so far as I know.


 


I have to disagree that 35p is a good deal. Its fraud in my view but as that's not the view of the law I will have to live with it.


 


 


Thanks anyway

Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

I can understand why you feel like the only problem is fraud is extremely difficult to prove.

The person to blame is the administrator for underselling the assets. Are there any other creditors that support your view?

Kind regards

AJ
Customer: replied 1 year ago.

Unfortunately the new owner has manipulated his other companies to be the largest creditor. Therefore the CVA will go through as he has enough of the vote to force it.


 


The administrators should not have let this happen.


 


 

Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

Under the Insolvency Act 1986 paragraph 74 Schedule B, you do potentially have a claim against the administrator where your interests have been unfairly prejudiced.

This would involve an application to court and you could hold the administrator personally liable.

I look forward to hearing from you.

Kind regards

AJ
Alex J., Solicitor
Satisfied Customers: 2692
Experience: 2 Years Insolvency Litigation
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Alex J.
Alex J.
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2 Years Insolvency Litigation