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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Nearly three years ago my wife and I sold a business to a colleague

Customer Question

Nearly three years ago my wife and I sold a business to a colleague where the purchase was agreed to be paid over 5 years. After two years Companies House decided that we were no longer trading and closed the company. Subsequently our bank closed our business account although we were still receiving these monthly payments (without notifying us beforehand, mind you!). The business buyer has recently ceased making his payments and now says (on advice from his accountant) that it is illegal to make payment to us personally, as opposed to into an account in the previous company name, as we might be money-laundering and he might become liable. I have pointed out that this would be our responsibility and on our heads alone. I have offered to send him a letter stating that we (as prev. owners of the business and the bank account) fully acknowledge payments made to our personal account are in place of previous payments made to the business account. I have even offered to supply him my tax reference so that he might write to HMIT regarding his concerns over money-laundering.
As the company no longer exists and as the bank will not reactivate the account, what are my options to be able to receive the payments or must I just change the locks and see how he responds?
My wife and I are both disabled and on benefits. This has ruined our Christmas and is making us both ill. How do we deal deal with this miserable individual?
Many thanks suggestions, Mark Chippendale
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts : Mark my name is ***** ***** I will help you with this.
Alex Watts : When you say you sold the business, was anything in writing?
Alex Watts : I assume you sold it to this gentleman personally?
Alex Watts : Were payments coming to you from the Ltd company or him monthly?
JACUSTOMER-hruvipz6- :

We have written confirmation of the sale - sale of assets and consultancy.

Alex Watts : Ok
JACUSTOMER-hruvipz6- :

We sold the company to him and changed the name as he was going to use the old name. Ie. we kept the same Companies House number and he received all assets and records

JACUSTOMER-hruvipz6- :

from his Ltd co., to our Ltd co.

Alex Watts : Ok but who did you get payment from? Him personally or the compNy?
Alex Watts : ok. The purchase though was from him personally even though you were paid by company?
JACUSTOMER-hruvipz6- :

#from his company account

Alex Watts : ok
Alex Watts : But was the purchase from him personally of your company?
JACUSTOMER-hruvipz6- :

I assumed WE sold HIM the business but the payments went from his co. acct. to our co. acct.

JACUSTOMER-hruvipz6- :

do I need to check the docs?

Alex Watts : please.
JACUSTOMER-hruvipz6- :

I can't find it on my pc atm - my wife has nipped to the shop and should be back in 15. she knows where to find it, I hope!

Alex Watts : Sure. I may be in court but will reply,
JACUSTOMER-hruvipz6- :

Ok understood. will wait confirmation that you're back

Alex Watts : Yes. Thanks but post the info first
JACUSTOMER-hruvipz6- :

Alex, Having some problems finding the paperwork of the sale but here's the original situation... Our company Orpington Chiropractic Clinic Ltd was owned by us/my wife and she was the sole director. Motivation Ltd bought the business from OCC Ltd whose name was then changed to Fairfield Rentals Ltd at Companies House. Motivation then made the agreed monthly payments to Fairfield Rentals to pay name, assets, records and equipment of the business plus consultancy services. This continued until our bank closed the account and we asked that the monthly BACS payments be redirected to our personal account at the same bank and this was then when problems began. Without telling us of any problem he might have with such payments we only learned that the purchaser had any issue when the next payment was not received. We were then told that he had been advised (by his accountant) that it was "illegal" payments to be made into our personal account as that could be construed as money-laundering!! We tried but were not able to reactivate the old business account and other banks have told that to open a new sole trader business account will take up to a month - we are not in a position to hold on that long and it wouldn't surprise us if he still refused to pay as it wouldn't be in the name "Fairfield Rentals LTD"! Since then and despite numerous attempts by us to communicate, including with his accountant and between both ours and his accountant he personally has been extremely difficult to get in touch with and the situation remains completely unresolved. His answer is just "well I cannot make any payment into your personal account as it is illegal". No attempt at other resolution whatsoever.

JACUSTOMER-hruvipz6- :

Have found the original document of sale, signed by my wife and purchaser both as directors of their respective companies. Vendor and Purchaser listed as the companies, not as individuals. How should I forward an electronic copy to you?

Alex Watts : Email to***@******.*** but that may take a day or two to be forwarded onto me
Customer :

Thank you very much. Hope you have had a thoroughly successful day!

Alex Watts : Thanks I did as it happens!
Ash and 3 other Law Specialists are ready to help you
Customer: replied 2 years ago.

I'll just wait until you come back to me - is that right? Cheers, Mark

Expert:  Ash replied 2 years ago.
Sure.
Expert:  Ash replied 2 years ago.
Its bad news I am sorry to say. The Company was purchasing your company, not the Director himself.
This means that your contract is only with the Company. If the company goes under and you have no personal guarantee I am sorry to say that all you can do is become a creditor.
That is because the debt is with the Company and not the Director personally.
Does that clarify?
Alex
Customer: replied 2 years ago.

I guess this is a problem when you fall foul of the legal niceties when the current situation could never reasonably have been foreseen (mutter, mutter, obscenities minutes!).

As he does not seem to be aware of this loophole, as it were, and as I don't believe minute he has any moral grounds paying other than this is a handy means of delaying money leaving his bank (and bearing in mind his argument solely stems from his accountant suggesting it might be illegal/money laundering to pay into an account other than the one we initially chose, which understandably happened happened to be an account with our business name), do you have any suggested courses of action that I might take?

What I'm getting at is that you have pointed out to me a legal oversight on our part which has only arisen subsequent to the decision by Companies House to close the company down (without discussion with us) and the bank subsequently closing the business account (also without any notice). Consequently, if we were to overlook this point have we any other legal angle to encourage him to pay up?

I don't believe I'm asking you advice, as you are acting on my behalf and not as an independent judge but merely to offer me any legal opinion as to why he should feel comfortable making payments into another account that I could present to counter his insistence in the illegality of doing so on the grounds of potential money-laundering and his view that he could be held liable in some way. I shall quote my earlier suggestion...

I have pointed out that this would be our responsibility (re. potential money-laundering) and on our heads alone. I have offered to send him a letter stating that we (as prev. owners of the business and the bank account) fully acknowledge payments made to our personal account are in place of previous payments made to the business account. I have even offered to supply him my tax reference so that he might write to HMIT regarding his concerns over money-laundering.

The sums we are talking about totals £1500 per month over about 28-9 months which may not be a huge amount in many business disputes but since my wife and I are both registered disabled (I'm in a wheelchair with MS and my wife has had 3 spinal surgeries and is on constant morphine medication) it is of crucial importance to us as we have no other means of generating income or savings. I have to implore you to please give me some ray of hope from all of this.

Many thanks, Mark

Expert:  Ash replied 2 years ago.
All the best.
Sorry its not better news.
Alex
Customer: replied 2 years ago.

Do I assume you have read my reply of 21.35?

Customer: replied 2 years ago.

Sorry if I seem to keep going on, Alex, but can you answer the 2/3 questions in my previous reply. "Sorry its not better news.", does not seem to be much of an answer but more of a dismissal, which is why I have assumed you had not read it.

Regards, Mark

Expert:  Ash replied 2 years ago.
Sorry.
1. Any other way to get him to pay up - no. In the absence of any personal guarantee its a company debt.
2. Anything else to encourage to pay up. - the problem you have is this. The contract is with the company and not the director personally. Therefore there is very little, sadly you can do.
If you had a contract in the individual name, or a guarantee then you have no claim personally.
Alex
Customer: replied 2 years ago.

Thank you. I do understand though it grieves me sorely. One final question then... Might I have some point to make with Banking Ombudsman regarding the bank closing the account when payments were still regularly being made into the account?

I feel I know the answer - I'll have to ring them to ask as it's not a legal matter.

TRegards, Mark

Expert:  Ash replied 2 years ago.
Yes you are right its not a legal answer.
I am sorry, but I have to be honest.
Alex
Customer: replied 2 years ago.

I promise that question about the letter is my last one!!

Expert:  Ash replied 2 years ago.
Sure.
If you have other questions in future you can post them attention and start them W
Alex
Customer: replied 2 years ago.

We may be getting out of sync., I fear.

The last question I referred to was regarding this matter.

I asked, would a letter from me (as suggested in my very first post) accepting any liability money-laundering, etc. absolve him of any liability. This seems quite key to his argument which may fall down if I can show he has no such liability.

And this IS my final question!

Regards, Mark

Expert:  Ash replied 2 years ago.
No. Its a criminal offence so you can't exclude him from that!
Alex
Customer: replied 2 years ago.

OK thanks anyway

Expert:  Ash replied 2 years ago.
Happy to help.
Alex