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Sole trader to Ltd Co debts - strange one this

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Had a shop as sole trader then became a Ltd Co. Shop now closed & business waiting the 3 month mandatory period before applying to Companies House to be sruck off the register & formally ceasing to exist. All traders with whom we did business were notified that we had ceased to trade.

 

Last week got a claim from our local court for a debt owed. The claim was sent to my private address & is brought against me T/A my business.

 

This company accepted the change from sole trader to Ltd Co & their invoices are addressed to the Ltd Co so am I right in defending all of the claim since it is being brought against me personally as opposed to my business?

 

Also, is it standard for the front page of the claim to be photocopied and changes made to it before being posted?

 

http://img522.imageshack.us/img522/4581/16341260.png

 

I don't want to ring the court as I feel that my name is becoming too well known to them!! :lol:

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Guest wino

Hi mkb

I to had a shop (Ltd) we ceased trading on the advise of insolvancy practictioners. 5 suppliers put claims in to court claiming from me personally. I had signed the account form and in each of the 5 cases there was a small sentance wrote different on each one but it says that I agree to be liable for the company to pay on time.

I took this to mean I will make sure the company pays on time not that once we had gone bust I would be liable for the debts. I now have 5 CCJs registered against me.

 

You need to check out any paperwork you signed with the trader to see if this crafty wording is there.

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Hi mkb

I took this to mean I will make sure the company pays on time not that once we had gone bust I would be liable for the debts. I now have 5 CCJs registered against me.

 

You need to check out any paperwork you signed with the trader to see if this crafty wording is there.

 

That's shocking Wino :eek: If these clauses are there then what is the point of having a Ltd Co - more expensive to comply with regs & suppliers can still come after you as an individual???

 

In my case, I don't recall ever signing any agreement as I took over an existing business initially & they were already suppliers to that business. I have since sold the original one & started the one which has now collapsed & don't recall signing any new agreements. They have used on the claim form the current co name & address but the 1st co's postcode then hand-written on bottom of form that its to be sent to my personal address so it seems a complete mock-up of a claim IMO.

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Guest wino

You can ring the court office and check that it is a genuine claim.

If it is you need to send the acknowlegemnt form back saying you wish to defend the claim and that will give you more time.

Request by recordered delivery the signed agreement that the trader is 'supose' to have.

If they cannot produce the agreement then I do not believe you can be held liable in a court.

 

Another mistake I made was with the Funding Corporation -car loan. They put on the court forms to return paperwork to their offices which I did. I ended up in court as they said they never received them. The judge told me all paperwork must go to the court not the plaintiff. I got a charging order on my house for that one:mad:

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first thing to do is ring the court and check out the claim number and that there is a genuine claim with that number in your name.

 

It is quite common for suppliers to get a small ltd business owner to indemnify the credit personally as a condition of credit.

 

You need to get them to provide document that prove your personal liability

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Have spoken to the court who say that it is a legitimate claim form (even with the amendments!!)

 

Also spoke with business debtline who advise that they shouldn't be claiming against me personally as they accepted the change in status of the business and this is proved by the issuing of invoices to the Ltd Co name.

 

Will send acknowledgment & in due course the defence to say that debt belongs to Ltd Co not myself as an individual. In the meantime, I will send a CPR 18 request for the info they wish to rely on in court ;)

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Guest wino

Good luck mkb:)

 

Keep us posted.

Just a reminder do not sign your CPR 18 request

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lbrecpry.png

 

So no documents other than the bounced cheques & invoice to which it relates being used by claimants. On my defence form I have written that the claimant has issued this claim against an individual but relates to a Ltd Co therefore I deny any liability for the outstanding monies.

 

Should I add anything else? The invoice has the Ltd Co name on it so I feel it is relevant but dont know how to word it into my defence :rolleyes:

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Just to be sure- was the cheque issued in the name of the limited company and not personally? If that's the case I think you have a very strong defence.

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Hi Seminole

 

This is where it gets complicated!

 

LTSB decided to close our Ltd Co account so our accountant advised that there would be no problem in using the T/A account for payments & receipts so the cheque that bounced was a T/A cheque but the invoice is to the Ltd Co.

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Oh dear, I was afraid that might be the case.

 

I think you may need to take legal advice on this as the law around liability for cheques is quite complicated. The accountant was correct in the sense that you could pay the debt from a personal or T/A account and it would simply be a movement on your director's loan account but I don't know if any personal liability attaches to you.

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I Think I Have Some Good News

 

Just Spoke To A Pal Who Is An Accountant But Get It Confirmed

 

If The Invoice Was To The Ltd Company And No Personal Guarantee Exsists

 

They Creditor Has No Claim

 

You Need To Send The Creditor A Copy Of The Invoice In The Ltd Company Name,

Thats Who The Account Is Linked With

T/aaccount Means Nothing

 

Its If The Invoice Is Drawn Against The Ltd Company That Counts

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If The Invoice Was To The Ltd Company And No Personal Guarantee Exsists

 

They Creditor Has No Claim

 

Its If The Invoice Is Drawn Against The Ltd Company That Counts

 

Thats what business debtline also said :D

 

So what should I put on my defence form other than what I said above?

 

The invoice was attached by the claimant when they issued the claim so there can be no dispute that its the Ltd Co invoice.

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Well Thats Your Answer

 

What Has Been Said Allready

 

Have You Tried Phoning Them And Explaning That They Will Have To Pay Costs

 

They Have No Claim/case

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Not phoned but did think I might email the person that sent the letter.

 

Think I'll do it about 4pm today :lol:

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Blooming well forgot to email them on Xmas eve!!!

 

How does this look?

 

I write with reference to your letter & court claim against me.

You have issued the claim against me as an individual, however this claim should be addressed to the business of xxxxx Ltd, as this is a company liability & not mine personally.

The invoice you attached to the claim verifies this.

To save court time & costs, I request that you discontinue your claim.

If you refuse to discontinue, I will ask the court to strike out your claim on the basis that it is factually incorrect.

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Email sent & this received in reply:

 

Thank you for your email.

 

I appreciate your comments; however, we are not pursuing the limited company for non-payment of its account but are rather suing in respect of the dishonoured cheque which was in your personal name (Mrs xxxx t/a xxxxxx) and not in the name of the limited company; accordingly, the liability for this payment remains with you personally. This is because, under the Bills of Exchange Act 1882, the law says that when you write a cheque to someone, you effectively promise that the cheque will definitely be honoured by your bank and if, for whatever reason, the bank does not honour the cheque, you imply that you will compensate that person in full.

 

I would strongly recommend that you seek legal advice to verify this if you are unsure; however, I can confirm that we will strongly contest any claim you make for our action to be struck out since this would be an abuse of procedure (especially since there is almost no defence to a dishonoured cheque). If it is of assistance, I would refer you to the information given under the following link http://www.insolvencyhelpline.co.uk/ltd-companies/bad_cheques.php which confirms the details I have provided above.

 

In the circumstances, I trust that you will now arrange for the amount due to be paid without further delay.

 

Yours sincerely

 

Any suggestions guys?

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WELL WAIT FOR MORE COMMENTS AS IME UNSURE BUT IVE SPOTTED

 

xxxx t/a xxxxxx) and not in the name of the limited company

 

T/A GIVES THE GAME AWAY

 

TRADING AS

 

THEY HAVE NO CASE BUT WAIT FOR CONFIRMATION

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That's pretty much why I think you need specific legal advice. The question here is who is the customer and does it matter that the cheque was issued by you in a personal capacity rather than through the legal entity that was the customer.

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It's this bit I'm unsure of........

 

 

however, we are not pursuing the limited company for non-payment of its account but are rather suing in respect of the dishonoured cheque which was in your personal name (Mrs xxxx t/a xxxxxx) and not in the name of the limited company; accordingly, the liability for this payment remains with you personally.

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Sorry Seminole - was doing above post before seeing yours!

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They are effectively saying the debt may not be yours personally but you chose to write out a cheque and therefore the debt is now yours. It sounds highly unreasonable but it's just the sort of thing that a court may have agreed to in the past.

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This sounds correct, however if they have attached the invoice to the claim instead of the bounced cheque then where does it stand?

 

A solicitor is definitely in order here.


I really do appreciate all those 'thank you' emails - I'm glad I've been able to help. Apologies if I haven't acknowledged all of them.

You can also ding my gong if you prefer. :)

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They attached both the cheque & the invoice :confused:

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