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Shutting down a company - Problems


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I left my permanent position to go out undertaking contract work a couple of years back and was convinced to set up an engineering company with 2 friends of many years. This company was to be a subsidiary of one of the other guys companies which worked in a similar field:

 

Shares as follows:

Me - 49% MD (no other businesses)

Person 2 - 26% Director (MD of the parent company)

Person 3 - 25% Director (Employee of parent company)

 

Firstly, as person 3 is not a director of the parent company does this still form a valid subsidiary? I'm not sure how much difference this will make to my main point below.

 

Due to a changing Market and change in my family commitments ( little change!) I have chosen to take up a permanent role within large company again and this has been the start of the problems.

 

The company has traded for 16 months and is being wrapped up. I am personally responsible for bringing in all of the work and have passed on many associated benefits to the parent company ( such as consequential works etc).

 

Person 2 and myself have agreed on some costs which could be shared between the companies - this has been painful as many of these overheads were not a requirement for the operation of this side of the business.

 

After weeks of discussions, person 2 forwarded details to the accountants to finalise the accounts. I have just received the drafts and hoped to get things wrapped up. To my horror, the schedule of agreed costs to share had almost doubled as he had loaded the schedule up with additional costs most of which cannot be reasonably justified - examples:

  • We took out some extensions on the insurances which had little cost impact due to the relative differences in company size and turnover - he wants 50% of the total insurance costs
  • He is trying to offset 50% of the office rent to subsidiary. I was the only employee of the sub and there wasn't space for me to have a desk in the office - this didn't matter as I only went there about 4 times and that was when they needed help with other things.
  • He wants the sub to pay towards his admin person at 50% and cover the same on all of her training.
  • This list of costs grew significantly when he saw how much was left in the company bank account and he wanted as much of this to bail out his other somewhat troubled company.

 

Now to the question!

 

The final accounts for the company are due at the end of the month, I really want to get this resolved without any kind of penalty etc but cannot get person 2 to even talk about the costs he wishes to offset - I strongly disagree with some of them but how can I resolve if he won't communicate?

 

My directors account is technically overdrawn ( and I've taken a poor salary/div for the hours I've put in to earn this money) due to these costs. Accountant suggests that the directors will vote to clear this.

 

Does anyone have any thoughts?

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This is an intrenal company dispute and can only be resolved within the company. If an internal company dispute ends up going to law there won't be enough money left to share anything :-(

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I am a barrister specialising in employment law, and only represent employees. My advice on employment issues is advice - not legal opinion - and is based only on the facts you provide. If you want an accurate assessment of your case and prospects, you should get legal opinion from a lawyer - not a public forum. Anything I tell you is for guidance only, and is based on my experience of the law in the context of what details you provide.

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