Why the client needed our help
Our client was the sole director of an online retail company which entered into liquidation following issues with its supply chain as a result of the Covid-19 pandemic. The liquidator of our client’s company investigated into the events leading up to insolvency and determined that there were claims to be made against our client personally on the basis that our client had:
- Received an unlawfully high salary;
- Received payments from the company that could be considered preference payments pursuant to s.239 Insolvency Act 1986;
- Received payments from the company in exchange for no consideration and therefore at an undervalue pursuant to s.238 Insolvency Act 1986; and
- Facilitated cash withdrawals from the company bank account which could not be explained by the liquidators.
How we helped
In total the liquidators sought to recover in excess of £130,000 from our client. We advised our client that there were strong legal defences available to her in response to the majority of the liquidators’ proposed claims. We reassured our client that we would set out her grounds of defence to the liquidators and did exactly that. We provided explanations for the vast majority of the payments that the liquidators had taken issue with, providing evidence in support of our client’s position.
The outcome
Our client was aware that if court proceedings were issued against her then she would potentially be burdened with the costs of defending those proceedings, even if those costs could be recovered from the liquidators in the event of a success. We were therefore instructed to negotiate a pre-issue settlement and were eventually able to settle for the sum of £6,600 – a mere 5% of the sum initially sought by the liquidators.
