Liquidation

silverdawn

I attended a creditors meeting this morning of the company i used to work for as i am owed a large sum of money from un-paid wages.
The directors of the company sold the assets of the business and lease of the building earlier this year and used this money to clear their overdraft.

My question ....Is paying off bank loans and overdrafts seen as fraudulent preferential payment...?

This company cleared their bank loans before paying secured creditors and unsecured creditors.

dbran

Hi

Yes. The directors cannot pay off any creditor once they have come to the conclusion that the company cannot continue to operate and pay its debt as they fall due.

The liquidator can review all the transactions of the company for two years prior to his appointment and if there are any creditors that have been preferred he can seek to get the money back from them or if this is not possible sue the directors.

The liquidator also has to prepare a report to the ODCE on the conduct of the directors int he period prior to the liquidation.

Dbran

silverdawn

Hi Dbran,

Thanks for your reply,
This is what i thought also and had asked that question today to the directors of the company and their solicitor's responce was that they had an oblegation to the bank to lodge the money.....

The directors appointed the liquidator, so who is he really acting for..?

dbran

Hi

The solicitor is incorrect. What you are describing is a possible case of a preferential payment.

However this can be difficult to prove as the director has to know or ought to have known that he was trading illegally at the time.

In practical terms you would need to have a "smoking gun" so to speak ie a letter from the accountant, bank etc saying that the company should be wound up as evidence. It is very difficult to prove what is going on in someone's mind.

I believe the liquidator is appointed by the creditors in the creditor's meeting. The directors simply propose a liquidator at the meeting but the creditors can decide to propose a liquidator of there own.

If the liquidator is any good he will apply to the DETI to get the redundancy payments paid out direct to the employees. You should therefore get your unpaid wages eventually.

Kind Regards


Dbran

silverdawn

Hi Dbran,

Thank you so much for all your help and information on here, it has really been valuable to me. I will be using this information to see what more i can do and i will be challenging the liquidator on the possible case of a preferential payment.

Regards
Silverdawn

Pandoras Twist

The ODCE do help with queries too. If you give them a call they could give you a course of action.

silverdawn

Hi Pandora,

Just been on to the ODCE who have been so helpfull and have asked me to express my concerns in writing to them and they will take it from there. Many thanks pandora