How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Alex J. Your Own Question
Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3652
Experience:  Solicitors 2 years plus PQE
13113900
Type Your Law Question Here...
Alex J. is online now

HiMy company has received a legal letter of claim from a

Resolved Question:

Hi
My company has received a legal letter of claim from a customer to ask for a certain sum of fund. If we do not make the payment to settle, then the customer will want to bring the issue to the Manx courts. As the company is not doing well and have financial difficulties, can the company proceed to declare bankrupt after receiving this letter of legal claim?
If company has declared bankrupt, will the company still need to stand trial in the courts?
Any liability to the directors?
Thanks.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
How much is the customer claiming?
What other debts does the company have?
The directors will only be personally liable if they trade the company knowing it is insolvent, dissipate the company assets to the detriment of the creditors or personally guarantee the company debts.
Do the shareholders want to put the company into liquidation?
Kind regards
AJ
Customer: replied 2 years ago.

Hi AJ

The customer is claiming USD40k and to pay his legal fee GBP4k. The debt the company has is the professional fees owe to a 3rd party.

If we have received the letter of claim from a legal house (engaged by the customer), can we still put the company into liquidation? How would the liquidation work?

Thanks.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
You can voluntarily put the company into liquidation - this requires a special resolution of the shareholders.
If someone commences proceedings against you this is not a bar to liquidating a company.
There are various offences a director can commit that will make then personal liable for a company's debts in insolvency. See S.212-217 of the Insolvency Act 1986. Assuming you have not personally guaranteed any debts - the main defence against these offences is to take professional advice and follow it - this is accepted by the Insolvency Service. Therefore if you are seriously considering insolvency I would go and speak to an Insolvency Practitioner and get them to advise you, as at least this will protect you personally against any liability. What then happens to the company is not so much your problem.
Kind regards
AJ
Alex J. and 2 other Law Specialists are ready to help you