The key issue
Two clients sought our assistance after placing their company into liquidation. The liquidator claimed that the combined overdrawn director’s loan account amounted to over £1.45 million. This claim was based on extremely poor accounting records, which complicated the case further. Their former accountant, who happened to be an old friend, had neglected to properly account for years of transactions.
Adding to the complexity, both clients were in the midst of a highly acrimonious divorce. They had both already engaged barristers and solicitors, at great cost. So as well as the massive financial risk, there was also a highly emotive element to this case.
Why the client came to us
The liquidator, with the backing of litigation funders, appointed an aggressive legal team and even resorted to employing private investigators to delve into our clients’ personal affairs. If this case were to proceed to court, our clients would have incurred exorbitant legal fees, potentially reaching hundreds of thousands of pounds, to defend against baseless claims.
Additionally, they faced the threat of bankruptcy after receiving a statutory demand, having already expended £225,000 on legal fees with no tangible outcome. Recognizing the urgent need for a strategic approach and expert guidance, our clients entrusted us with their case.
What we did
Our primary objective here was to settle the liquidator’s claim, protect their interests and mitigate any potential financial and emotional distress. This involved us:
Dismissing their Legal Representation: Recognizing that the previous legal representation had been satisfactory despite incurring substantial costs, we took the initiative to dismiss them and personally handle the negotiation process. This ensured greater control over the case and enabled more efficient communication with the liquidator.
Thorough Review and Analysis: We meticulously reviewed the evidence presented by the liquidator, scrutinizing the incomplete and unreliable accounting records. This was over a decade’s worth of accounts, receipts and bank statements. In addition to this, we always fully our clients’ financial position including income, expenditure and assets. This allowed us to identify discrepancies and uncover important facts that would support our clients’ position.
Settlement Negotiation: Through careful evaluation of the evidence, we determined that both owed far less than claimed and, one of the clients was actually owed money by the business. Armed with this knowledge, we engaged in extensive negotiations with the liquidator, emphasizing the inaccuracies in their claims and the need for a fair resolution.
Outcome
After rigorous negotiation, we successfully settled the claim of £1.45 million for £625,000. Combined savings for both clients amounted to £825,000.
By resolving the case in this manner, we not only protected their significant assets but also enabled them to move forward and put this distressing chapter behind them.
This case shows how quickly a company liquidation situation can escalate if expert advice is not sought from the outset. By leveraging our financial expertise, we achieved a favourable outcome for our clients.
