Sue an individual if company no longer trading

[Northmark]

Hi,

If a company has either ceased trading, has recommenced trading in a different name, or is in liquidation can I sue the owner of the company directly?

Many Thanks

[islandgirl]

I am sure members will need to know if it is a Ltd company?

[Northmark]

Yes it is

[PallasAthena]

Generally no because the Limited company is a different "legal person" to the directors. The directors are not personally responsible for the company's debts so you can't sue them for money the company owes you, nor can you sue the company's shareholders/owners.

There could be limited special circumstances where the directors are personally liable though so tell us the full story.

[Northmark]

Thank you. I am not able to share as much info as I would like on a public forum, as it could easily be identifying.

The owner is a former employer. I believe he sold the company for a very large sum and then later repurchased the company for a very small sum. From what I can understand the company has been renamed very slightly, several times, and is still trading, but I believe is in liquidation and shows minimal assets.

I believe the owner has done this to intentionally conceal assets, move money around and to avoid being sued.

He also owns multiple other companies of different trading and business types and is an extremely wealthy individual.

[atticus]

Almost certainly the answer is "no".

You should notify the liquidator of your claim, just in case there is any possibility of a payment to unsecured creditors.

The circumstances in which you, rather than a liquidator, can bring action against individuals are rare, and such cases are very complicated.

[Northmark]

Thank you. How would I find out who the liquidator is? It was the owners solicitor who has stated that the company is in liquidation and the owner is denying any liability and trying to claim that his other employees and individuals are liable.

It's very confusing as on companies house the only info I can see regarding any insolvency relates to the company previously being dissolved. However they are still trading, but have registered the company under a very slightly different name which is showing as an active company.

Could you expand on what kinds of circumstances could action be brought against the owner directly?

[Northmark]

Generally no because the Limited company is a different "legal person" to the directors. The directors are not personally responsible for the company's debts so you can't sue them for money the company owes you, nor can you sue the company's shareholders/owners.

There could be limited special circumstances where the directors are personally liable though so tell us the full story.

Thank you. Are there any examples of special circumstances when director would be personally liable?

[R0b]

Thank you. Are there any examples of special circumstances when director would be personally liable?

Yes there are a couple.

1. Piercing the Corporate Veil. There are various strands to this but the most frequently used argument is that a company has been setup specifically as a sham to avoid legal liability. The courts will 'pierce' the veil between the company liability and the director liability and then hold the director responsible. This is a very difficult and complex argument and should not be used unless you have concrete evidence to prove your case. Many have tried this argument, very few have succeeded.

2. Tort of procuring a breach of contract. For you to succeed, you will need to show that the director acted in a way that intentionally caused a breach of contract between you and the company. In other words, the director had knowledge that there would be a breach of contract and in knowing that breach would occur, went ahead and committed an act that caused you to suffer some kind of economic loss.

There are other potentials but they are every niche and specific and since you have given very little information about the problem, I can't add anything else.

[PallasAthena]

Another example would be where a director has given a personal guarantee in respect of a contract the company has entered into.

[Northmark]

Thank you for the above examples, which are really helpful. If there are any other example circumstances please let me know, as it might help me to put together my claim.

I believe I do have adequate evidence of the above, which also includes publicly available company records of random and repeated chopping and changing of company name, dissolving company and then registering again, repeated resignations and reinstatements of directors and officers. There is also various news articles about the owner selling the said company for many millions and then purchasing again for a minimal amount. Also online information about another former employee reporting a criminal act carried out by the owner. He tends to have an unsavoury reputation, however he is extremely wealthy and seems to think he is above the law. I also found details of a court case between him and HMRC when he was trying to wrongfully claim expenses as a result of company being sold off, which I understand he lost the case. Could I use any of the above examples as extra evidence to support my claim?

What has happened so far is that I sent a reasonably friendly letter directly to him. I set out the basis of my complaint and did not mention any potential legal action, but asked him to consider a gesture of goodwill. He responded pretty much immediately, demanded to know who had given me his direct email address and sent me a barage of emails demanding I answered all of his questions before he would respond to my letter. I found his emails quite intimidating, but at the same time he led me to believe he was going to offer to settle amicably.

I then received a letter from his solicitor stating that the relevant company is in liquidation and claiming that his other individual employees, including one who is now deceased is liable and he denies any direct liability.

On companies house the business is showing as active and is currently trading with no mention of any insolvency. His denial of any liability seems ridiculous, as he is of course liable for actions of his employees.

I have now sent a letter of claim stating that if matters are not settled amicably I will take legal action. I also alleged that his solicitor is being complicit in attempting to deceive and mislead by claiming that random other individuals are liable, instead of the owner.

I feel like trying to claim through the company in some way would be extremely difficult, or impossible and believe that suing him directly would be much easier. Can I do that?

[atticus]

Look at the file for this company on Companies House website. If the company is in liquidation it will say so, and give the liquidator's details.

EDIT - I see you have done that. Point out your findings to the company's solicitor and ask for his comments.

[Northmark]

Thank you. I just checked again and is definitely no mention of any liquidation. The only mention of any insolvency is from the previous registered name, which is only a very slight variation in the name That one states "dissolved". So I presume they are trying to claim that I would only potentially have a claim against the older "dissolved" company, which is effectively the same business / company?

I sent my letter of claim yesterday and requested a reply within 14 days. Should I wait to see what response is received, or should I write again to the solicitor questioning the above?

[PallasAthena]

Have you done a search of the Insolvency notices published in the London Gazette?

Notices | Insolvency | The Gazette

[Northmark]

Thank you. Yes I have just checked that as well. There are 2 insolvency notices previously listed for the same company, under slightly different business/company names.