Deferred invoices - Insolvent accountant

An associate of mine was asked by an accountant to defer invoices for many years.

The accountant has now said that he became insolvent as a limited company although he trades in the same name as ever as a partnership and hid the insolvency by changing the name of the registered business.

The invoices remain outstanding: the business is exactly the same and probably uses the name illegally as defined by the insolvency act 1986.

Can the invoices be pressed now re the period pre insolvency? They are "new" invoices although some will go back 6 years plus!

Andrew A

Hold on...

We are confused!

So your friend invoices a Ltd company (lets call them ABC Ltd) and ABC Ltd subsequently asks the invoices are deferred.

With you so far.

Then a non limited business starts, trading under the name ABC with the same owner/employees as ABC Ltd.

Are you asking if your friend can now re-invoice or otherwise charge ABC for the work conducted for ABC Ltd?

If so the answer is probably no. The Ltd company is it's own entity and any and all liabilities will remain with that company. As a general rule you can not pursue a director of a Ltd company personally. (Some exceptional circumstances exist, but it is very rare.)

If ABC Ltd is still trading your friend can still pursue that company for payment, even if the shareholders, directors or name has changed.

Please note this is very generic advice, your situation may be subtly different. It's difficult to give a definitive answer with the little info available.

The trading name of the business is the same and, in fact, the business was a partnership before an incorporated company (compulsory winding up), another limited co.(same/similar name (s216)) and now is a partnership again after CVL of that last Co!

The trading name has always been the same within the confines of section 216 and no one has ever been told that the business has been going through various incarnations of incorporation or not.

I am looking closely to see if permission has been asked for the use of a prohibited name in respect of the two incorporated failures but the most interesting issue is whether, at the last failure, there was a concurrent unincorporated business running alongside the limited co; operating the exact same business inc. premises, staff, contact numbers and clients.... Is it legal or even possible to be both corporate and not at the same time!

My friend always invoiced the trading name - being oblivious to all the changes - hence my question....

Andrew A

Now that's an interesting one...

It's not uncommon for some less than scrupulous members of the business community to "phoenix" a company with a brand new co with no liabilities, but this is the first time we have come across an accountant doing so.

Anyway, back to your friend... We would say that the first step in recovering the invoices is to identify the exact time that the business relationship started. From there you will be able to look at the history and identify the likely collection target.

If the relationship began prior to the incorporation of the first Ltd company, then you have the option to pursue the original two partners.

Even if the relationship began when the first limited company was in existence, it may be possible to argue that unless your friend was specifically told to invoice the now defunct Ltd company that the accountant has personal liability. But don't count on them to take that with good grace!

With relation to the prohibited name, this is something that may be worth looking into, or at least intimating that you will do so if the invoices are not paid ;)

I am awaiting a response from Companies House as I write re the use of the name.

I know that the relationship pre-dates the earliest Co. and the present snr. partner was the same then (and also the sole dir. of both ltd(s).)

I have been polling local clients of the accountant and ones going back many years were never notified of the business changes...

I have discovered, too, that the company name was changed just prior to liquidation and all notifications were made in that new name without prior names; trading names, and in at least one instance, the Company number! The constant trading style hid all this.

My friend has a disability and was exploited by this person for many years. I am intending to pursue this matter if I can and will keep you posted...

Andrew A

Andrew Andersson wrote:

I know that the relationship pre-dates the earliest Co. and the present snr. partner was the same then (and also the sole dir. of both ltd(s).)

This would seem to be the key point. If the relationship pre-existed the Ltd's and related to a partnership then we would argue that the Snr Partner/Director is personally liable.

That is of course unless the company notified your friend of the change in the trading situation, but it doesn't sound like they did...

Good luck and do let us know how you get on :)