HOW NOT TO RUN A BUSINESS - A TRUE STORY!
By Tim Corfield
Mr Neverwrong negotiated the purchase of a coffee shop business around 2 years ago through his limited company (he owns all the shares). He wanted the lease on the town centre location. However, he didn't actually want to continue the coffee shop business. He thought it was too expensive to seek the advice of a solicitor or accountant and so he dealt with the whole transaction himself.
Mr Neverwrong's company took over the employments of the coffee shop employees before they were dismissed. He'd never heard of TUPE. A tribunal has recently found in favour of the employees and awarded around £50,000 plus costs against Mr Neverwrong's company - a total of around £65,000. This made the company clearly insolvent.
When Mr Neverwrong started to trade his company he didn't want to be a company director so he appointed Mr Doasyourtold to act as director. Mr Neverwrong was cheque signatory and he controlled the outgoings from the bank account. He also placed all the orders and told the director what to do. He'd never heard of a shadow director.
When Mr Neverwrong heard about the tribunal cases being awarded against the company he transferred all of the stocks to his other company without any consideration. He'd never heard of a transaction at an undervalue.
Mr Doasyourtold was concerned about his position and consulted us. I had a meeting with Mr Doasyourtold and explained that Mr Neverwrong needed to understand and support an insolvency process. Reluctantly, Mr Neverwrong eventually attended a meeting with me that he was one hour late for. Mr Neverwrong didn't think that the company needed to enter a CVL procedure and thought he could deal with it himself.............
Some people would prefer not to listen - like Mr Neverwrong. We can't help those people. But if you have a client or contact with financial difficulties that might appreciate independent advice and guidance don't hesitate to call me or Richard Owen or any of the Griffin & King team. I'm sure we can help!