Business partner walked away and set up himself

fabwing

Hi, I invested 40.000 euro with a business partner, we had a contract but he did not sign it, we spent all the money setting up the company equipment testing packaging design vans etc and purchased 14,000 bags of product, he walked away when all the money was gone, he has all the equipment, he has now set up a new company under a different name, he also has the recipe of the product, i sent him a solicitors letter and he will not reply, he can not pay his mortgage and said to me come after me i have nothing of value,it will cost me approximately 15 thousand to go to the high court i put all my savings into this company and cant sleep or do anything, please can somebody advise me. i had 49% he had 51% of a limited company

MarkR

The internet is not the place for this type of query. Solicitors really is your only route.

fabwing

Hi.
i have being to a solicitor and they are costing a fortune recommending barristers for advise, i do not have any more money left.

MarkR wrote: »

The internet is not the place for this type of query. Solicitors really is your only route.

_Brian

€40000 to throw around but no signed contract, big miss.

Legal route is your only hope but it seems you were taken for a ride.

Who's name were the invoices for the equipment in since it was your money spent?
If tey were invoiced to you and he's taken them I'd be inclined to contact the Guards and report the equipment stolen.

fabwing

Hi, I went to the guards and reported him for fraud, after several weeks the told me to go the legal route, all invoices and equipment were purchased in the company name.

_Brian wrote: »

€40000 to throw around but no signed contract, big miss.

Legal route is your only hope but it seems you were taken for a ride.

Who's name were the invoices for the equipment in since it was your money spent?
If tey were invoiced to you and he's taken them I'd be inclined to contact the Guards and report the equipment stolen.

Just a little Samba

fabwing wrote: »

Hi, I went to the guards and reported him for fraud, after several weeks the told me to go the legal route, all invoices and equipment were purchased in the company name.

If everything is paid for in the company name what he has done amounts of theft. Go back to the gardai.

Geniass

fabwing wrote: »

we had a contract but he did not sign it, we spent all the money

Then there was no contract

Can you prove the recipe is yours and unique to you?

How was the equipment purchased - what details (business name etc) are on the invoice?

fabwing wrote: »

he can not pay his mortgage and said to me come after me i have nothing of value,

If this is true then the remaining assets of the business are all you can get back. Can you prove ownership?

It's likely it will require a court case and Sheriff if he is calling your bluff.

pedronomix

If you put the company into liquidation, the liquidator will be bound to recover any misappropriated assets. what did he put in?

delahuntv

Just a little Samba wrote: »

If everything is paid for in the company name what he has done amounts of theft. Go back to the gardai.

nope - it is probably a civil matter as both parties are connected.

Very difficult situation and one option is to find out where this other guy is operating from and literally taking back the goods.

Another option is to look at injunction - but that's costly.

Also, you could take legal action against his new company as it is the new company that is using the equipment - that would stop him getting any credit or loan facilities. Not too expensive to go the district court route.

dbran

MarkR wrote: »

The internet is not the place for this type of query. Solicitors really is your only route.

+1

What a mess. You need a good solicitor for this one and how did you end up going into business with this guy. Surely the signs that he was as devious as you say would have been quite obvious before hand.

The fact is a director is required at all times to act in the best interests of the company and he is clearly failing in his duties as a director. Specifically the director is required to safeguard the assets of the company. The new Companies Act enshrines this in law whereas before hand it was just part of case law. However going the liquidation route could be a bad move as it could boomerang back on you because you allowed the assets of the company to be stolen by the other director. You could both end up in front of the ODCE as a result.

Going round and attempting to take back the stuff may be trespassing. Remember the right thing is not always the correct legel thing.

The only option is to take the new company to court and try and get an injunction to take back the property. This may take some time to go through the process. And if he is still a director of the old company, how would one initiate this. I am sure he wont be turning up to any more of the directors meetings especially when the agenda is to sue him. So you will have to remove him as a director of the old company first of all.

You need a good solicitor and one who is going to act on your behalf and not one who is going to just fire a bog standard letter across the bows. He clearly knows the system and he knows he can ignore them until the real letters start to arrive.

You might find that if he is required to appear in court there may be some movement. Often times these things are settled on the steps of the court on the day of the actions

Best of luck with it

dbran

gargargar

If the company bought the products then it is belonged to the company. Also if you supplied the company with 40k you probably have an outstanding director's loan for that amount. If you have not traded that does not matter. Some advice from an accountant could be helpful too (and not expensive I would think).

Surely if it can proved that the items were bought with company money and your partner has not returned them, the company can take action to retreive them?

The Corinthian

fabwing wrote: »

Hi, I invested 40.000 euro with a business partner, we had a contract but he did not sign it

No matter how many times I read this line, I can't get over the monumental scale of clusterfück this sentence represents.

i sent him a solicitors letter and he will not reply, he can not pay his mortgage and said to me come after me i have nothing of value

Maybe what he says is true. Maybe not. Wouldn't be the first time that someone's played the poor mouth to avoid getting sued in Ireland.

delahuntv wrote: »

nope - it is probably a civil matter as both parties are connected.

Connected by what? Remember, he never signed anything.

This is really a question that can only be answered by a solicitor.

pedronomix

The Corinthian wrote: »

No matter how many times I read this line, I can't get over the monumental scale of clusterfück this sentence represents.

Maybe what he says is true. Maybe not. Wouldn't be the first time that someone's played the poor mouth to avoid getting sued in Ireland.

Connected by what? Remember, he never signed anything.

This is really a question that can only be answered by a solicitor.

The Op did suggest that they were directors/shareholders in a company and thus would be legally connected, if that is actually correct. Always hard to be sure with people who mismanage their affairs in this fashion!

fabwing

fabwing wrote: »

Hi, I invested 40.000 euro with a business partner, we had a contract but he did not sign it, we spent all the money setting up the company equipment testing packaging design vans etc and purchased 14,000 bags of product, he walked away when all the money was gone, he has all the equipment, he has now set up a new company under a different name, he also has the recipe of the product, i sent him a solicitors letter and he will not reply, he can not pay his mortgage and said to me come after me i have nothing of value,it will cost me approximately 15 thousand to go to the high court i put all my savings into this company and cant sleep or do anything, please can somebody advise me.

So was the original company bankrupt and folded? Was it a Ltd company? Or were you just a partnership?

And how did it happen that he walked away with all the equipment?
what about the existing bags of stock did they not sell?

How much is the equipment worth?

Did the original business fail? If so and he starts up again, why wouldn't he fail this time doing the same thing?

delahuntv

Another option is to totally ignore that any partnership or contract was in existence (even an unsigned one) and that he was an employee/contractor who stole the goods. Then its a criminal matter and gardai can become involved.

You would need to not mention in any way that there was a partnership or any other agreement in place and deny any connection other than him being someone who came in on contract to help you. If you can show payments to him for work he did, that is even better.

You would also need to show where the funds came from and the expenditure and show a link between that and money paid for the goods and equipment.

If he claims that there was a partnership - just deny it and say that he did enquire about a partnership, but as he did not have anything to bring to the table, you didn't proceed. Then after that he stole the goods.

Its not telling lies, its just makiing your story sound the way it is in reality and takes the emotional part out.

fabwing

He put in the idea i funded all the capital,it would cost more to liquidate the company than the equipment was worth second hand ,

pedronomix wrote: »

If you put the company into liquidation, the liquidator will be bound to recover any misappropriated assets. what did he put in?

fabwing

Hi, we have not traded and we purchased 14 thousand bags of product,which i have in storage, he sent me a contract stating i can sell them or dump them but i have to take personal responsibility and am liable for the product, as we are a limited company, sign and return contract to him, apologies as i am a bit scattered at the moment.
Regards

gargargar wrote: »

If the company bought the products then it is belonged to the company. Also if you supplied the company with 40k you probably have an outstanding director's loan for that amount. If you have not traded that does not matter. Some advice from an accountant could be helpful too (and not expensive I would think).

Surely if it can proved that the items were bought with company money and your partner has not returned them, the company can take action to retreive them?

The Corinthian

fabwing wrote: »

He put in the idea i funded all the capital,it would cost more to liquidate the company than the equipment was worth second hand ,

And what would it cost, per year, not to liquidate the company..?

fabwing

The company is a limited company,we spent all the money on equipment and product, set up, computers, printers,etc van for him i have 49% he has 51% of a limited company he was key man and came up with the idea and was working from his house and using all the equipment. we had three distributors ready to go and one guy on commission and a lot of sales set up when he walked he used my money as a test and we would have done very well with this product.
Regards

Deleted User wrote: »

So was the original company bankrupt and folded? Was it a Ltd company? Or were you just a partnership?

And how did it happen that he walked away with all the equipment?
what about the existing bags of stock did they not sell?

How much is the equipment worth?

Did the original business fail? If so and he starts up again, why wouldn't he fail this time doing the same thing?

Duckett

winding up of the company sounds like your only option. An injunction, while costly, would be the next logical step.
Painful experience - he knew exactly what he was doing when he declined to sign the contract. Legal will take years - what is the shelf-life of the stock. Looks like you need to get on with the rest of your life and leave it to a solicitor to chase .......

pedronomix

fabwing wrote: »

Hi, I invested 40.000 euro with a business partner, we had a contract but he did not sign it, we spent all the money setting up the company equipment testing packaging design vans etc and purchased 14,000 bags of product, he walked away when all the money was gone, he has all the equipment, he has now set up a new company under a different name, he also has the recipe of the product, i sent him a solicitors letter and he will not reply, he can not pay his mortgage and said to me come after me i have nothing of value,it will cost me approximately 15 thousand to go to the high court i put all my savings into this company and cant sleep or do anything, please can somebody advise me. i had 49% he had 51% of a limited company

I note you have changed/added to your original post which 2 pages on is not a great idea!!

Moving on....

If the company has never traded and has no other creditors, you may be able to have it voluntarily struck off, but you would be foolish to just leave it sit dormant, you risk all sorts of penalties.

Sounds to me like he was the main man and you were rather naive. The big dog ate you lunch unfortunately, i would doubt you will ever get a "result", you really need to salvage what you can if anything.. and the as Duckett said, get on with the rest of your life or this thing will eat you up.

pedroeibar1

fabwing wrote: »

The company is a limited company,we spent all the money on equipment and product, set up, computers, printers,etc van for him i have 49% he has 51% of a limited company he was key man and came up with the idea and was working from his house and using all the equipment. we had three distributors ready to go and one guy on commission and a lot of sales set up when he walked he used my money as a test and we would have done very well with this product.
Regards

It’s been pointed out several times already that you need a solicitor. Forget injunctory proceedings, which are not a remedy for your particular problem and will cost thousands. You are in a deep hole and by not visiting a solicitor you are just digging it deeper. The other Pedro’s suggestion of liquidation has considerable merit for corporate enforcement reasons, not least to protect your own position. There are other options that will be put to you by a solicitor. Drift along and you could – at worst - find yourself precluded from holding a directorship for years, or at best a need to have a minimum paid-up capital of thousands in any new company. You have a fiduciary duty to the company and its creditors; you cannot just walk away from this mess and claim that it costs too much or it was not your fault. If the company does not file accounts it eventually will be struck off and its liabilities will devolve onto you. I would not write to the ODCE as it would appear that your co-shareholder is a ‘smart lad’ and you could easily find yourself on the end of libel proceedings. Go see a solicitor, it will be money well spent.

pedroeibar1

Cross-post Pedro. I thought there were other creditors?

pedronomix

pedroeibar1 wrote: »

Cross-post Pedro. I thought there were other creditors?

he seems to suggest that the thing never flew and that the other guy jumped once the cash was spent. But as usual we are trying to work with incomplete info/story!!

sconhome

If I have this right.

You set up a company (A) with a guy, spent your money, he has controlling interest and has now run off with the equipment the company owns and set up a second company (B)?

What has happened to company A? He is just as liable for the liquidation of the company as you are. The examiner won't be too lenient on the assests of the company going missing & the ODCE would have something to say about it.
Company B has stolen the assets of Company A as far as I can see.
What does your accountant have to say about this? Is your €40k registered as a directors loan to the Company? Is it reflected in the shareholding of the company? Assuming the 49/51 split is based on investment into the company what happened to the cash he invested?

If I were you the very first thing I would do now is get photographic evidence that he is currently in possession of the company assets before he 'loses' them or otherwise disposed of them.
I would also report the theft of the assets to the Gardai. Let them investigate the crime there.
Speak to the accountant.
Tell a lawyer what you want to happen. Don't let them run you around.

He may not be able to pay his mortgage but he still has a house as a personal asset and there probably is (depending on circumstances) equity there that can be released in a rising market.

fabwing

The product has one year shelf life left, but i cannot sell it as its the companys product and i am liable for it.

Duckett wrote: »

winding up of the company sounds like your only option. An injunction, while costly, would be the next logical step.
Painful experience - he knew exactly what he was doing when he declined to sign the contract. Legal will take years - what is the shelf-life of the stock. Looks like you need to get on with the rest of your life and leave it to a solicitor to chase .......

fabwing

I put in 40k as a investment he put in the idea NO money, i sent him a solicitors letter he did not respond and he will not do the tax return for the company,company A is still in existence but not trading he has set up company B and is doing well
Company A done all the R@D and then he walked away and set up company B he has all the equipment at his house including the company van.

Regards

AKW wrote: »

If I have this right.

You set up a company (A) with a guy, spent your money, he has controlling interest and has now run off with the equipment the company owns and set up a second company (B)?

What has happened to company A? He is just as liable for the liquidation of the company as you are. The examiner won't be too lenient on the assests of the company going missing & the ODCE would have something to say about it.
Company B has stolen the assets of Company A as far as I can see.
What does your accountant have to say about this? Is your €40k registered as a directors loan to the Company? Is it reflected in the shareholding of the company? Assuming the 49/51 split is based on investment into the company what happened to the cash he invested?

If I were you the very first thing I would do now is get photographic evidence that he is currently in possession of the company assets before he 'loses' them or otherwise disposed of them.
I would also report the theft of the assets to the Gardai. Let them investigate the crime there.
Speak to the accountant.
Tell a lawyer what you want to happen. Don't let them run you around.

He may not be able to pay his mortgage but he still has a house as a personal asset and there probably is (depending on circumstances) equity there that can be released in a rising market.