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Nicola-mod
Nicola-mod, Moderator
Category: Law
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Experience:  Moderator
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Can directors of an insolvent company transfer the assets and

Customer Question

Can directors of an insolvent company transfer the assets and liabilities of the Company to a NEWCO where the Company is Guarantor for another unconnected Company's rent and where no claim has been made at the time of the transfer? Would it make a difference if the Rent was in arrears at the time of the transfer although no claim had been made?
Submitted: 4 years ago.
Category: Law
Expert:  Nicola-mod replied 4 years ago.
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Nicola
Customer: replied 4 years ago.

Please continue the search!

Expert:  Nicola-mod replied 4 years ago.
Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola
Expert:  Nicola-mod replied 4 years ago.
Hello,

I apologise as we have not yet been able to find a Professional to assist you. Do you wish for me to continue to search for someone to assist you or would you like for us to close your question at this time?

Thank you for your patience,
Nicola
Customer: replied 4 years ago.


Please continue

Expert:  Nicola-mod replied 4 years ago.
Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola
Expert:  Alex J. replied 4 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ, I am a company law expert and I will assist you.

In theory what you are proposing is possible for two reasons:
1. The company transferring the assets and liabilities will not prejudice its creditors as all the creditors will be transferred across as well;
2. The company receiving the assets and liabilities will not be prejudiced as it will receive assets.

The consideration you must have is as follows:
1. You will need a novation for all the company creditors to transfer their debts to the new co. It will have to be all the creditors, you cannot leave some behind in a company with no assets, if you did they could potentially put the company into liquidation and hold the directors personally liable;
2. This activity is probably outside the ordinary course of business and therefore will require shareholder approval. Also if the directors are in any way the same or connected for the two companies it will be a Substantial property transaction under S.190 of the Companies Act 2006 and will require a special resolution to approve it.

Can you tell me any more about the situation?

Kind regards

AJ
Expert:  Nicola-mod replied 4 years ago.
Hello,

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Thank you,
Nicola