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Max Lowry
Max Lowry, Advocate
Category: Law
Satisfied Customers: 1457
Experience:  LLB, 10 years post qualification experience
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My wife used to be a director of a company that went in to

Customer Question

My wife used to be a director of a company that went in to voluntary liquidiation in 2010. We have received a letter today to tell us that one of the directors is being pursued for malfeasance. We are being notified that she is not being pursued at this point, but, that their clients rights are reserved against my wife to seek a contribution to the monies owed. We will seek legal advice on Monday but now we're petrified about what they can and can't do. The total monies owed is 60K. How much of a contribution can we be expected to make? We have cash in the bank of around £8k and equity in our home of about 30K.
Submitted: 5 years ago.
Category: Law
Expert:  Max Lowry replied 5 years ago.
Hi, welcome to Just Answer. I will help you with your question. The liquidator appears to be still investigating the claim but from what you are saying he will attempt to argue at some stage that your wife misapplied company money or she was in breach of her fiduciary duties which caused the company to suffer loss. He will be looking to your wife to make a contribution towards the company's losses. This is definitely something that needs a solicitor to go through the paperwork with your wife but if there is a claim for misfeasance and it can't be defended she may be asked to repay the money back. It's not to say he will be looking for the full £60k if that's what is ultimately due but he will probably be amenable to do a deal. He may accept a lump sum with payments over a number of months. If a deal cannot be done the worst case scenario is that he can pursue your wife through court and possibly make her bankrupt. This will put her personal assets at risk or those assets she has an interest in. Don't panic yet but certainly find out if the liquidator is going to actually make a claim for the money as he appears to be asking for more information at this point. It's probably better to see a solicitor early on so she can formulate a defence and not admit something that could prejudice her position.
Customer: replied 5 years ago.

Surely if an Ltd company is placed into liquidation (voluntary) or otherwise the directors can't be pursued personally for those losses? Have I misunderstood? The 60K is a figure that was taken by another director in loan and share payments, this appears to be the money that is being sought by the luquidators. My wife is not that director.

Expert:  Max Lowry replied 5 years ago.
I'm afraid that is a misconception. Directors can be pursued personally after liquidation for losses the company may have suffered whilst being a director. There are rules about taking directors loans and usually they must be repaid to the company. There is a provision in the insolvency act which can make a co director liable for the loan even though he did not benefit from it but knew it had been taken by the other director. Directors can be jointly and severally liable to repay it.

I'm sorry to inform you of this but this is your wife's position and I have to be honest.