Question on change of company status

[spamheed]

Here's a scenario I have recently encountered and I just want to run it out to see if my understanding of the system is correct.

 

 

Mr Smith opens a takeaway and obtains a utility contract in the name of Mr Smith, at this time although the takeaway has its own name, all of the bills are in the name of Mr Smith

 

 

Over the course of time a dispute is created with the utility company resulting in Mr Smith withholding payment until the dispute is resolved.

 

 

in the middle of last year Mr Smith changed the takeaway into a limited company with himself and one other as company directors.

 

 

As it stands today, the utility company is threatening Mr Smith with bailiffs etc even though the legitimate dispute is still outstanding and unresolved. Mr smith is still withholding payment.

 

 

Question, given the limited status of the takeaway, is there any risk to it from bailiffs as the utility contract is in the name of Mr Smith. Would the bailiffs have any right to interfere with the Takeaway at all?

[HCEOs]

In a word no, but if the goods within were bought by Mr Smith personally then they could be available for seizure if they we're not sold, legally and correctly for their value, to the Ltd company.

 

What it does mean is that the Utility could go to Mr Smith's house and take his and his wifes goods including their car etc. They could also issue a Stat Demand which if followed through to bankruptcy would force Mr Smith to resign his Directorship.

[HCEOs]

I would add that in circumstances like this it is the goods of the individual personally that usually prompt payment as removing from a takeaway is expensive and often not worth it. Also, cooking equipment is often leased in such places.

 

In my mind the Utility is better to enforce against Mr Smith anyway.

[spamheed]

Thank you for such a prompt reply,

 

 

That was my understanding also and pretty much the provisional advice I proffered to Mr Smith, the takeaway itself has been set up and is operating very much on a shoestring and has very little by way of tangible assets and Mr Smith is well aware that he is personally liable for the debt and the actions which can and cannot be taken against him, it was specifically the Limited company aspect which I was unfamiliar with.

 

 

Thanks again

[numbers666]

Is there a further dispute, with regards to the LTD company withholding also, or was an new account opened in the LTD company name on incorporation ?

[spamheed]

My understanding is as follows.

 

 

The takeaway premises is still being supplied under Mr Smiths existing (disputed) utility contract, no payment is being made.

 

 

A new supplier is to fulfil a new contract in the name of the ltd company as of the end of the month. Seemingly, a lot of this has come about because post from the utility company was posted through the letterbox of an upstairs flat, rather than that of the takeaway.

 

 

a. there is no dispute in the name of the Ltd company

b. there is a risk of imminent disconnection

c. A new contract has already been signed in the name of the Ltd company

[Isiris]

Think they have convoluted the situation though.

 

Why has the contract not been changed to the LTD companies name? That would give far more protection.

[numbers666]

http://www.legislation.gov.uk/ukpga/Eliz2/2-3/21/section/2

 

 

There is legal right of entry under warrant to DISCONNECT - remove meters.

 

Certainly going before a judge to offer evidence against grant of would be problematic as the delay in transferring the account to the Ltd would be difficult to explain - middle of last year to Jan-15 - you can understand why the company wants its money!

 

If the lease etc is in individual name - utils in individual.....

 

There is a dangerous game going on here, and usually its action now, ask questions later.

 

Not supporting HCEO's or Bailiffs in anyway (sorry HCEO's), under the regs above, they have many more powers.... get the dispute fixed asap.

 

N

[spamheed]

Think they have convoluted the situation though.

 

Why has the contract not been changed to the LTD companies name? That would give far more protection.

Yes i think so also.

[spamheed]

It looks as if the utility company have now terminated the contract with Mr Smith and have started to supply Takeaway Ltd by default, ie on an uncontracted basis, they have sent a letter to Takeaway Ltd stating as much.

 

 

I believe that Mr Smith will allow this situation to continue until the new contract is in place and then pay the small outstanding balance in the name of Takeaway Ltd.

 

 

Mr Smith has also received a termination letter from the utility company in the name of "Mr Smith Takeaway Ltd", which I think is naughty given that the contract was solely in the name of Mr Smith. I have advised Mr Smith to contact the utility company to ensure the name of Takeaway Ltd is removed from the bill and the two names are kept entirely separate as I see this as a deliberate attempt by the utility company to join the accounts and liability

[Coughdrop]

You would certainly be best advised to keep accounts separate. It appears a little as though the utility company, by linking liability, may be trying to get a CCJ via the back door, and thus have a detrimental effect on the limited company's future credit worthiness when re-leasing equipment etc... is needed.

 

What was the original dispute and why cannot it not be resolved, thus avoiding all the problems?

[spamheed]

I have given Mr Smith a three point plan to follow, to ensure accounts are separate, check that new utility provider is still on, or if dates could be moved forward, and to settle the balance as soon as possible.

 

 

I believe that they placed Mr Smith onto their most expensive tariff after the contract was underway, then when he complained they said they'd lost his original agreement with the agreed prices on it. I suggested that he place the monies not being paid to them to one side so he won't have as much of a shock when he has to settle, but that's outside of my sphere of influence.