Sometimes the truth is stranger than the fiction

Mickk

A business in my industry recently pulled this off.

The company was very successful in the past 3-5 years and had been going about 10 years. They bought a 40k sq ft warehouse in 2007 (t/o of around 7 mil that year) and possible over stretched themselves a little, here is what they did last month.

The director buys the warehouse at current market value with personal money (arms length transaction but down about 50% of the 2007 price), the company then files for voluntary liquidation. They owe revenue over 300k, golden pages 200k, main supplier in Uk 350k and over 600k on mortgage for warehouse. The liquidators move in and sell all company assets at auction which are pretty much all bought by owner including the trading name. Within one month they are back open in the same premises with the same stock and the same name (director trading as) but they are down over 1.5 million euros worth of debt!

Apparently it's all legal, the directors could possibly be done for reckless trading or trading insolvently but it only happens very rarely. All in they are open again less than a month after they closed (quietest month of the year aswell)

shoutman

That's ridiculous, you'd think the director's would all be struck off. That's downright criminal what they have done.

MB74

shoutman wrote: »

That's ridiculous, you'd think the director's would all be struck off. That's downright criminal what they have done.

Yeah ditto to that, trade like that can put honest jobs in jeopardy. A firm like that should be boycotted.

DubTony

Fellahs, in the coming months I'll reveal my experiences of the recent past. I won't say anything at this pint as there's a lot of crap to go through and I'd hate to prejudice anything.

But right now I will say this. I've had a major paradigm shift in my thinking over the last few months. I'm not at all happy with many of the thoughts that have gone through my head, but I am coming to the opinion that there is a fine line between a lot of business activity and a lot of criminal activity, and unfortunately, coming from where I am now (mentally) I mean this most sincerely.

Two examples come to mind. While the activities are definitely not criminal, the actions of the people involved leave a lot to be desired. The two examples are solicitors and bankers. (but then most of you guessed that anyway). I suppose I'm really talking about ethical and moral behaviour here. At this point in time it seems to me that there are people in this country who are quite prepared to break someone down to nothing in order to secure a bonus or ensure a fee. I'm not talking about business people, I'm talking about employees. People who go home at the end of the day and supposedly leave their work in the office, pick up the kids at the creche, change into jeans and runners, have dinner, take a walk and watch a couple of hours of tv every night.

What thier motivation is escapes me, but I feel I've been dealing with the scum of the earth this past few weeks. At least when a scumbag robbed me in the shop, he was up front about it, with a gun or a knife. These pieces of crap use threats and intimidation to get their bonuses and ensure they keep the fancy lifestyle they've become accustomed to, all without ever risking a penny of their own money. Although I do I feel that in similar cases an entrepreneur is usually protecting something more than just his job.

Anyway, I'm ranting. Sorry.

DubTony

DubTony wrote: »

Fellahs, in the coming months I'll reveal my experiences of the recent past. I won't say anything at this pint as there's a lot of crap to go through and I'd hate to prejudice anything.

But right now I will say this. I've had a major paradigm shift in my thinking over the last few months. I'm not at all happy with many of the thoughts that have gone through my head, but I am coming to the opinion that there is a fine line between a lot of business activity and a lot of criminal activity, and unfortunately, coming from where I am now (mentally) I mean this most sincerely.

Two examples come to mind. While the activities are definitely not criminal, the actions of the people involved leave a lot to be desired. The two examples are solicitors and bankers. (but then most of you guessed that anyway). I suppose I'm really talking about ethical and moral behaviour here. At this point in time it seems to me that there are people in this country who are quite prepared to break someone down to nothing in order to secure a bonus or ensure a fee. I'm not talking about business people, I'm talking about employees. People who go home at the end of the day and supposedly leave their work in the office, pick up the kids at the creche, change into jeans and runners, have dinner, take a walk and watch a couple of hours of tv every night.

What thier motivation is escapes me, but I feel I've been dealing with the scum of the earth this past few weeks. At least when a scumbag robbed me in the shop, he was up front about it, with a gun or a knife. These pieces of crap use threats and intimidation to get their bonuses and ensure they keep the fancy lifestyle they've become accustomed to, all without ever risking a penny of their own money. Although I do I feel that in similar cases an entrepreneur is usually protecting something more than just his job.

Anyway, I'm ranting. Sorry.

Tony I think unfortunately thats the ruthlessness of business. It took me a while to grasp it and realise people like lawyers lie and cheat because its the culture of their work, whatever it takes to get the best result for their clients. Thats what they do ethics are meangingless to them if it will win the case

After getting burnt a few times for being too soft, I realised you have to expect and prepare for people to be low lifes and never assume they will be ethical. Most of it comes down to the contracts and paperwork. If you expect and prepare for it when it comes it wont bother you as much. Thats my two cents anyway!

Sonnenblumen

Mickk wrote: »

A business in my industry recently pulled this off.

The company was very successful in the past 3-5 years and had been going about 10 years. They bought a 40k sq ft warehouse in 2007 (t/o of around 7 mil that year) and possible over stretched themselves a little, here is what they did last month.

The director buys the warehouse at current market value with personal money (arms length transaction but down about 50% of the 2007 price), the company then files for voluntary liquidation. They owe revenue over 300k, golden pages 200k, main supplier in Uk 350k and over 600k on mortgage for warehouse. The liquidators move in and sell all company assets at auction which are pretty much all bought by owner including the trading name. Within one month they are back open in the same premises with the same stock and the same name (director trading as) but they are down over 1.5 million euros worth of debt!

Apparently it's all legal, the directors could possibly be done for reckless trading or trading insolvently but it only happens very rarely. All in they are open again less than a month after they closed (quietest month of the year aswell)

If you have proof of illegal or criminal activity you can either report it to the relevant authorities or do nothing. Based on what it is here does not seem illegal, every co and director are entitled to due process. Bitching about about the system achieves nothing, and unsubstantiated wild statements could rebound on you with dire consequences. If this comapny has done nothing wrong otherthan to cease trading and subsequently sold off by liquidator, so what, that happens everyday.

I am surprised that wild posts like this are permitted, your comments also cast a slight against the liquidator.

Sounds like a bitching comment which lacks any credibility and really doesn't belong in a business forum. I can understand the re-emergence of a competitor might be a cause for disappointment and possibly concern but better to keep things in perspective.

Sonnenblumen

shoutman wrote: »

That's ridiculous, you'd think the director's would all be struck off. That's downright criminal what they have done.

What aspect was criminal? Where have the directors breached company law and what gives you authority to demand that they be struck off?

Even allowing for the fact that you are a student demanding sanction is a very serious matter. Accusing someone of criminal activity is a very serious matter and demanding sanctions is absolutley crazy.

I hope for your sake that the individuals concerned do not read your post.

Important to separate emotion from fact.

studiorat

Just reading the first post there and the talk of criminal activity. Considering how much he was into his creditors for, if the guy was a drug dealer ie. a "real" criminal he'd be shot.

Mickk

Sonnenblumen wrote: »

If you have proof of illegal or criminal activity you can either report it to the relevant authorities or do nothing. Based on what it is here does not seem illegal, every co and director are entitled to due process. Bitching about about the system achieves nothing, and unsubstantiated wild statements could rebound on you with dire consequences. If this comapny has done nothing wrong otherthan to cease trading and subsequently sold off by liquidator, so what, that happens everyday.

I am surprised that wild posts like this are permitted, your comments also cast a slight against the liquidator.

Sounds like a bitching comment which lacks any credibility and really doesn't belong in a business forum. I can understand the re-emergence of a competitor might be a cause for disappointment and possibly concern but better to keep things in perspective.

I thought this forum was all about sharing information about business's and how they work? If you read my post I did say it is all legal and I didn't name the company. I just thought it was interesting the way the system can work and people might be interested to see what sometimes happens.

The question has often popped up on here "should I trade as a sole trader or form a company" and during the times of boom the answer was often "if you make more money than you need to live on then form a company and retain the profits in the company to benefit from corp tax". When things have now gone bad this would be a big benefit of being a limited company, if the directors had just been sole traders they would be well and truly stuck with that big mortgage and other debts.

They are in my industry but not a competitor, I used to work with them and probably will work with them again. The directors aren't bad people and actually fairly clueless on the business side of things, I would be 99% sure that this would have been led by their accountant. If an accountant came to you and said I know a way we basically put 1.5 million euro extra in your pocket and it's all legal I think most people would do it... It was all big faceless companies who out, the revenue, the bank, the golden pages and their main supplier turns over over a billion a year.

The weird thing is the only illegal thing they have done has been the only moral thing they have done. Off the record they have honored the debts to the smaller suppliers in Ireland who the company owed money to, paid in cash from their own pockets!

newman10

Sonnenblumen wrote: »

If you have proof of illegal or criminal activity you can either report it to the relevant authorities or do nothing. Based on what it is here does not seem illegal, every co and director are entitled to due process. Bitching about about the system achieves nothing, and unsubstantiated wild statements could rebound on you with dire consequences. If this comapny has done nothing wrong otherthan to cease trading and subsequently sold off by liquidator, so what, that happens everyday.

I am surprised that wild posts like this are permitted, your comments also cast a slight against the liquidator.

Sounds like a bitching comment which lacks any credibility and really doesn't belong in a business forum. I can understand the re-emergence of a competitor might be a cause for disappointment and possibly concern but better to keep things in perspective.

It is against the Law to knowingly change your trading status in which you willingly attempt to defraud your creditors and not only are you liable but the advisors who have helped you are also in breach of the law

shoutman

Sonnenblumen wrote: »

What aspect was criminal? Where have the directors breached company law and what gives you authority to demand that they be struck off?

Even allowing for the fact that you are a student demanding sanction is a very serious matter. Accusing someone of criminal activity is a very serious matter and demanding sanctions is absolutley crazy.

I hope for your sake that the individuals concerned do not read your post.

Important to separate emotion from fact.

If a company director declares for voluntary liquidation only to go and essentially buy the company back at a huge discount from the liquidators it is illegal, the director's of the company should be struck off automatically for twelve months (this is the case with involuntary liquidation anyway).

The responsibilities of a director as outlined in The Company Law Enforcement Act, 2001, show that they have a Fiduciary duty to their creditors. If it went down as mickk has said it has done (and I trust it has for what would he gain by spreading lies about a company which he hasn't even named), then the director has willfully acted in breaching his responsibilities and thus I am of the opinion, albeit from my limited studies on the subject, that what has occurred is illegal.
It's not like what he was doing was a victim less crime (if such a thing exists), saying that because the individual paid back certain creditors who operated on a small scale basis does not exonerate him, bad debts accrued by the "big faceless companies" could be part of a reason for the company to downsize in which case people would be made redundant, losing their livelihood.

Even it is perfectly legal, in which case i'd be shocked that it was, it is downright 100% immoral to the nth degree.
It is essentially stealing.

I'd also like you to point out at which point did I demand that anyone would be struck off.

patftrears

The only people to fear in business is the revenue everyone else have no real powers and very rarely act ie(ODCE, Regulators etc)

Who cares what they have done, I doubt they would ever get credit, suppliers to deal with the reborn venture ever, so they might have wasted money buying assets from the liquidator.

Mickk wrote: »

probably will work with them again.

if you loose a deposit, don't get paid by them you have only yourself to blame.

Mickk

patftrears wrote: »

The only people to fear in business is the revenue everyone else have no real powers and very rarely act ie(ODCE, Regulators etc)

Who cares what they have done, I doubt they would ever get credit, suppliers to deal with the reborn venture ever, so they might have wasted money buying assets from the liquidator.


if you loose a deposit, don't get paid by them you have only yourself to blame.

I trust them (read:they would know better than to rip me off ). As I said I bet it wasn't their idea, they would have been advised by their accountant. I have to admit, I sort of have to hand it to them. Anyone who can take the revenue for so much money and do it legally deserves atleast a tiny bit of admiration...

What about U2 Ltd. moving their business to the Netherlands because they have no tax on music royalties? The revenue are down a few million a year because U2 set up a "holding company" there that now owns all the music they have ever created.

Sure Ireland has done the same thing for multinational companies for the last 20 years, letting them do the same by basing shell companies here and paying a third the tax they would have in the states. Ireland has effectively taken billions of dollars out of the pocket of the IRS. I know I will be "moving" to the bahamas when I make my millions

shoutman

I think it is different using tax avoidance methods to lower your tax payments and what has been said to have occurred here.
Yes it has similar characteristics but I believe that the tax system in this country is flawed and unfair in anycase.

Sonnenblumen

shoutman wrote: »

If a company director declares for voluntary liquidation only to go and essentially buy the company back at a huge discount from the liquidators it is illegal, the director's of the company should be struck off automatically for twelve months (this is the case with involuntary liquidation anyway).

The responsibilities of a director as outlined in The Company Law Enforcement Act, 2001, show that they have a Fiduciary duty to their creditors. If it went down as mickk has said it has done (and I trust it has for what would he gain by spreading lies about a company which he hasn't even named), then the director has willfully acted in breaching his responsibilities and thus I am of the opinion, albeit from my limited studies on the subject, that what has occurred is illegal.
It's not like what he was doing was a victim less crime (if such a thing exists), saying that because the individual paid back certain creditors who operated on a small scale basis does not exonerate him, bad debts accrued by the "big faceless companies" could be part of a reason for the company to downsize in which case people would be made redundant, losing their livelihood.

Even it is perfectly legal, in which case i'd be shocked that it was, it is downright 100% immoral to the nth degree.
It is essentially stealing.

I'd also like you to point out at which point did I demand that anyone would be struck off.

Again I repeat myself, where is the evidence of any wrong doing to substantiate the criticism of company directors/company or indeed the liquidator?

Your comments would also imply that the liquidator was complicit in an illegal act?

I think you are letting emotion get ahead of rational thinking. Company law is not about morality.

Your earlier post implied that the company directors should/would be struck off!

To repeat in the absence of any evidence of wrong doing, this company and directors can be identified, and given the casual but serious innuendo of some comments, it would not surprise me if a legal letter was drafted tommorrow.

I've no connection with any aspect but respect the fact that everybody even the characters of directors of failed entities are entitled to innocence under the law unless proven guilty.

Much better to see comments based on fact and not emotive speculation.

Sonnenblumen

newman10 wrote: »

It is against the Law to knowingly change your trading status in which you willingly attempt to defraud your creditors and not only are you liable but the advisors who have helped you are also in breach of the law

Where's the proof, all we know that a company went into liquidation (no mention of receivership) but anyways the assets are sold by the Liquidator.

What's new here and where's the proof of wrong doing?

Do you not think the liquidator is familiar with company law?

Buying old assets froma company that has cease trading/struck off etc etc is a regular event.

shoutman

I am merely giving an opinion on the story that has been told by Mickk, once again he has not named the company so how can the directors and liquidators be identified?

My earlier post stated that if Mickks telling of the story was true, and as I stated I wouldnt see why it would not be, then it is my opinion that the directors have undertaken an illegal act in contradiction to their duties and responsibilities as directors in a limited company.

I also don't see why you think that I would be getting emotional over this, I am not involved in this whatsoever so why you would think I would have an emotional attachment to this is beyond me.

Did you even read my last post in relation to company law?

shoutman

Sonnenblumen wrote: »

Where's the proof, all we know that a company went into liquidation (no mention of receivership) but anyways the assets are sold by the Liquidator.

Buying old assets froma company that has cease trading/struck off etc etc is a regular event.

What we have been told is that the director then re bought the assets back at a cut price, this is not a regular event.

Sonnenblumen

shoutman wrote: »

What we have been told is that the director then re bought the assets back at a cut price, this is not a regular event.

Are you going to be the first person to pay above market rates for Old assets?

The assets are sold by the liquidator and paid for by the purchaser. Spot the difference??

Anyway I'm out of here.

shoutman

I think you are missing something here. The problem is not that the assets were sold at a cut price, it was who they were sold to.
A director of the liquidated company.

I don't see why you are finding this so hard to understand, it seems fairly black and white to me.

Sonnenblumen

shoutman wrote: »

I am merely giving an opinion on the story that has been told by Mickk, once again he has not named the company so how can the directors and liquidators be identified?

My earlier post stated that if Mickks telling of the story was true, and as I stated I wouldnt see why it would not be, then it is my opinion that the directors have undertaken an illegal act in contradiction to their duties and responsibilities as directors in a limited company.

I also don't see why you think that I would be getting emotional over this, I am not involved in this whatsoever so why you would think I would have an emotional attachment to this is beyond me.

Did you even read my last post in relation to company law?

OK Columbo, to make it easy I've put the emphasis on some pertinent words:

A business in my industry recently pulled this off.

The company was very successful in the past 3-5 years and had been going about 10 years. They bought a 40k sq ft warehouse in 2007 (t/o of around 7 mil that year) and possible over stretched themselves a little, here is what they did last month.

The director buys the warehouse at current market value with personal money (arms length transaction but down about 50% of the 2007 price), the company then files for voluntary liquidation. They owe revenue over 300k, golden pages 200k, main supplier in Uk 350k and over 600k on mortgage for warehouse. The liquidators move in and sell all company assets at auction which are pretty much all bought by owner including the trading name. Within one month they are back open in the same premises with the same stock and the same name (director trading as) but they are down over 1.5 million euros worth of debt!

Apparently it's all legal, the directors could possibly be done for reckless trading or trading insolvently but it only happens very rarely. All in they are open again less than a month after they closed (quietest month of the year aswell)

You are familiar with who wrote the original post, his business and his business location. So it doesn't take a genius to figure out what comapanies are up in Sandyford etc. If I were connected I'd be smiling now.

shoutman

Why would it make a difference if you think you might know who the business in Mickks story is or not?

If it went down as Mickk said it did, then I believe that they have done something illegal etc etc.

I feel like i'm just repeating myself here.

Also if you were connected you'd be smiling? Why?

Hanley

Sonnenblumen wrote: »

OK Columbo, to make it easy I've put the emphasis on some pertinent words:

A business in my industry recently pulled this off.

Ireland's a big place.

The director buys the warehouse at current market value with personal money (arms length transaction but down about 50% of the 2007 price), the company then files for voluntary liquidation. They owe revenue over 300k, golden pages 200k, main supplier in Uk 350k and over 600k on mortgage for warehouse. The liquidators move in and sell all company assets at auction which are pretty much all bought by owner including the trading name. Within one month they are back open in the same premises with the same stock and the same name (director trading as) but they are down over 1.5 million euros worth of debt!

If you chose to liquidate voluntarily with debt outstanding doesn't it have to be done on the condition you have to expect to be in a position to pay it back within 12 months? Not sure on that tho.

And when you assume a companies trading name (ie buy it) don't you assume any debt associated with them?

You are familiar with who wrote the original post, his business and his business location. So it doesn't take a genius to figure out what comapanies are up in Sandyford etc. If I were connected I'd be smiling now.

Lol this company could ONLY be based in Sandyford? I can think of a at least one other large fitness co who've disappeared in the last 6 months.

Mickk

Sonnenblumen wrote: »

You are familiar with who wrote the original post, his business and his business location. So it doesn't take a genius to figure out what comapanies are up in Sandyford etc. If I were connected I'd be smiling now.

I said I am moving into a showroom in Sandyford Industrial Estate, I never said the company who did this were there (and they aren't btw). It's funny actually, I nearly ****ed things up for them without realising. I made an offer for their website (it is naturally google ranked first for a good few terms that would have been useful for me) and I also contacted the landlord of their showroom to see about renting it, neither got back to me and now I know why.

DubTony

Something that makes no sense to me here is the mortgage for the warehouse. The directors will almost definitely have had personal guarantees here. So there's no benefit in that transaction as far as I can see.

Mickk

DubTony wrote: »

Something that makes no sense to me here is the mortgage for the warehouse. The directors will almost definitely have had personal guarantees here. So there's no benefit in that transaction as far as I can see.

Do you reckon you would have to give a personal guarantee to get a mortgage like that if the company had a turnover of 7 mil (and it is a nice margin business)? I do know that that was the first transaction that took place, about 6 months before the voluntary liquidation, not sure if that has any significance.

DubTony

hmmm... I don't know. But when you hear of developers having all their assets put in their wives names, for obvious reasons I suppose, you have to imagine that personal guarantees are demanded by banks for absolutely everything.

homeOwner

Mickk wrote: »

....the company then files for voluntary liquidation. They owe revenue over 300k, golden pages 200k, main supplier in Uk 350k and over 600k on mortgage for warehouse.

From Basis
"For members to voluntarily wind up their company, a majority of the directors must make a statutory declaration that, having made a full enquiry into the affairs of the company, they are of the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months from the commencement of the winding up."

I find it very hard to believe (unless the owner of the company was very well connected) that the bank did not look for a personal guarantee for the mortgage.

Having wound up a limited company myself recently (without creditors) there are limitations to you starting up the same business again if you have previously been the director of a comapny that liquidated with creditors.

Mickk

DubTony wrote: »

hmmm... I don't know. But when you hear of developers having all their assets put in their wives names, for obvious reasons I suppose, you have to imagine that personal guarantees are demanded by banks for absolutely everything.

I thought that was because developers have no ongoing business trade eg they are not really getting a mortgage to run their expanding business more like they were getting a loan to buy "stock" to sell. Secondly it's different to get a loan to build something that doesn't yet exist and therefore some other collateral is needed.

It is the norm to get personal guarantees but if you look at some of the people who were given 100% mortgages over the last few years it wouldn't surprise me at all if they got a nonsecured mortgage in 2007.

I am not really trying to draw attention to this specific company, I just thought the principles of what they (and I am sure others) have done were shocking!

Mickk

homeOwner wrote: »

From Basis
"For members to voluntarily wind up their company, a majority of the directors must make a statutory declaration that, having made a full enquiry into the affairs of the company, they are of the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months from the commencement of the winding up."

I find it very hard to believe (unless the owner of the company was very well connected) that the bank did not look for a personal guarantee for the mortgage.

Having wound up a limited company myself recently (without creditors) there are limitations to you starting up the same business again if you have previously been the director of a comapny that liquidated with creditors.

If the company was able to trade for another 12 months and pay all their debts then why would you liquidate at all? It is your responsibility as a director to liquidate voluntarily as soon as you realise that your company in insolvent. If you carry on trading until your creditors bring you to court and you get liquidated by the courts you can be done for trading while insolvent and any further debts you accrue while you are deemed to have known or should have known that the company was insolvent you can be made personally liable for.

The company I know of are now open again (in the same location with the same staff again and selling very similar if not the same stock) and trading as sole traders t/a the original company's name.

homeOwner

Mickk wrote: »

If the company was able to trade for another 12 months and pay all their debts then why would you liquidate at all?

I've no idea. I was quoting from Basis. I presume some people have reasons for doing it if they have a specific section about it.

The company I know of are now open again (in the same location with the same staff again and selling very similar if not the same stock) and trading as sole traders t/a the original company's name.

That they are trading as sole traders now changes the ball game completely. I presume before this they were a limited company, hence the voluntary liquidation. The directors are most likely restricted from trading as LTD company. Any debt, credit or loans etc... they now take out wont be protected by limited liability.

Regardless, I will astonished if their creditors dont come after them, those debts are not trivial.

Mickk

homeOwner wrote: »

That they are trading as sole traders now changes the ball game completely. I presume before this they were a limited company, hence the voluntary liquidation. The directors are most likely restricted from trading as LTD company. Any debt, credit or loans etc... they now take out wont be protected by limited liability.

Regardless, I will astonished if their creditors dont come after them, those debts are not trivial.

They were a ltd company before this, then as individuals they bought back the name, website and stock from the company they were directors of (through the liquidators) and re-rented the same showroom premises.

With the name they bought they are now sole traders t/a the original company. If you visited them two months ago and went back this week you would have no idea that technically they are two different business's, same name, stock, premises and even staff and owners! It's considered immoral by most but very clever.

The creditors can only chase the liquidators who are now in control of the ltd company for their share of whatever money can be extracted from selling off the assets company.