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tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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A former director of the company has defrauded the company

Resolved Question:

A former director of the company has defrauded the company and has left the company with lots of liabilities including the tax man. What the best course of action?
Submitted: 2 years ago.
Category: Law
Expert:  tdlawyer replied 2 years ago.

tdlawyer :

Hi thanks for your question, I'm Tony, I can help you with this.

tdlawyer :

Is the company now insolvent as a result?

tdlawyer :

Can it trade out of the difficulties?

Customer:

The company is still trading with no cash flow

tdlawyer :

Okay, so you think it will become unable to pay its debts then?

Customer:

yes and he has left some creditors chasing for their money he also forged some signatures

tdlawyer :

Oh dear. Well, you might want to consult with the police about that too, it sounds like he may have committed a criminal offence by deceiving people and the company. In short though, if the company stands no chance of recovering due to this, the company should be closed down, as otherwise, you might be liable for wrongful trading which means you could be then ordered to pay money into the company to meet creditors debts. You wont be liable for that so long as you take steps now to close the company.

tdlawyer :

Alternatively, you could look at administration.

tdlawyer :

This is where you get protection from your creditors to allow the company a chance of surviving.

tdlawyer :

You can get more information about these here: http://www.companieshouse.gov.uk/about/gbhtml/gpo8.shtml

Customer:

Thanks Tony but before you go, is there any way of accessing banking details of his newly formed compay because we believe that that's where the money is.

tdlawyer :

You can via the High Court, if you get a court order, but that's the only way. This would be a potential claim by the company you have now, for diverting money/taking money unlawfully. You might also be able to buy that cause of action from the liquidator of this company (if it's liquidated) so you can benefit from the claim. There are lots of options here, but it can be pretty complex stuff.

Customer:

Are you still there Tony>

tdlawyer :

Yes.

Customer:

I asked if there is any way of accessing his financial situation pertaining to his newly opened company

tdlawyer :

I did answer, I wrote this:

tdlawyer :

You can via the High Court, if you get a court order, but that's the only way. This would be a potential claim by the company you have now, for diverting money/taking money unlawfully. You might also be able to buy that cause of action from the liquidator of this company (if it's liquidated) so you can benefit from the claim. There are lots of options here, but it can be pretty complex stuff.

tdlawyer :

You would need to issue a court claim against him and/or his new company.

Customer:

Would it cost us highly to apply to the High Court or can I apply without involving the lawyers due to expense. And what would the High court do because we do not want him to get the chance of transferring the money if he is alerted

tdlawyer :

People can do their own claims, but I wouldn't encourage you to do this type of thing without professional help. It's complicated and fraud/breach of directors duties claims are not routine claims and are heard by more specialist judges. It's not something you want to do alone.

tdlawyer :

I would suggest if you have evidence of fraud etc., then you need to go and take that to a solicitor to review. It might be that you apply for a freezing injunction, but again, this is complex stuff, but it would prevent him using the money in the other company.

Customer:

Tony this is really useful stuff but how would they identify his company's bank?

tdlawyer :

You dont - you would serve the Court order on all the banks, and they're required to identify whether he has an account, and if so, to freeze it.

tdlawyer :

Knowing the bank is helpful though, but not essential.

Customer:

Thanks do I need to use a company solicitor or any solicitor can assist with obtaining a freezing injunction and how long does the process take?

tdlawyer :

The proces will take a day from instruction if your solicitors can move quickly enough. You can use any solicitor you're happy with, but make sure they have experience dealing with this type of application. Just ask them if they have experience of seeking freezing injunctions. The Court will hear the application almost immediately.

Customer:

And supposing there is no money in his account, can we get in trouble for making that application? Because all we are interested is to get our money back.

tdlawyer :

you wont get in trouble for making the application simply because he's spent the money.

tdlawyer :

If he didn't take the money, then you don't get in trouble, you just lose the application and you can't proceed.

Customer:

Shall we be able to know the amount of money he has in the bank by freezing the account and also do you think its a good idea to use the no win no fee since we are short of funds.

tdlawyer :

Yes, you would get to know this, and yes, it should be possible for get a solicitor to look at this on a no-win no-fee basis.

tdlawyer :

Does this answer your question? Are you happy with the service please?

Customer:

Thanks Tony, after getting a freezing injunction what can he do legally to defend himself or to stop the injunction.

tdlawyer :

He would have to show that he was entitled to take the money by defending court proceedings.

Customer:

Many thanks Tony this has been really useful and I am rating your service as excellent

tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience: 11 years experience of general practice.
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