Bankrupt businessman and still a director..

[Haggleburyfinius]

Any help would be massively appreciated.

My family owns the title to a stable of magazines which were licensed to a third party about three years ago.

The third party has fallen behind with his monthly payments to a significant amount.

Recently word came through to us that this guy was declared bankrupt in December 2011. He is still however operating as managing Director of 3 companies. Only when confronted with this knowledge did the chap admit to the situation.

I am under the impression that this is illegal and is a serious matter; if so, what is likely to happen to him?

Our contract is with him personally, not his company btw. Is this agreement now null and void?

We are very concerned and will be taking legal advice promptly but I would appreciate some help in the meantime and to help me decide what action to recommend.

Cheers!

[Eric Mc]

First of all, is he shown as a named "director" of the company at Companies House? An undischarged bankrupt cannot be a formal director of a limited company.

A person who is not a "formal" director may be deemed to acting as a formal director if it is seen that they are essentially running the business and "directing" others in the business. This is known as a "shadow" directorship and this would be barred to an undischarged bankrupt too.

However, there are jobs in a company which may have an unoffical "director" in the job title, such as "Managing Director" or "Sales Director" or "Finance Director". On their own, these positions would be still open to an undischarged bankrupt - provided it could be shown that the bankrupt was not in "control" of the company or was not "directing" the company in any way.

[sumo69]

Regarding your contract, I suspect the only breach is the non-payment.

I assume there are clauses to void the contract in such circumnstances?

David

[Haggleburyfinius]

Eric Mc said:

First of all, is he shown as a named "director" of the company at Companies House? An undischarged bankrupt cannot be a formal director of a limited company.

A person who is not a "formal" director may be deemed to acting as a formal director if it is seen that they are essentially running the business and "directing" others in the business. This is known as a "shadow" directorship and this would be barred to an undischarged bankrupt too.

However, there are jobs in a company which may have an unoffical "director" in the job title, such as "Managing Director" or "Sales Director" or "Finance Director". On their own, these positions would be still open to an undischarged bankrupt - provided it could be shown that the bankrupt was not in "control" of the company or was not "directing" the company in any way.

He's still listed `as MD on CH and is still acting as such.

What's also weird is that he owes us money personally yet we have had no contact from his administrator. I think he's not told them about his debt to us.

What a mess.

[Haggleburyfinius]

sumo69 said:

Regarding your contract, I suspect the only breach is the non-payment.

I assume there are clauses to void the contract in such circumnstances?

David

There is no clause regarding his personal bankruptcy as far as I can see.

However, he is now in breach anyway due to missed payments and will we be moving next week to remove him from controlling the magazines.

We don't really want the hassle of running the titles ourselves like we used to but it's looking unavoidable in order to keep the titles published.

[Eric Mc]

Companies House normally would not show the wording "Managing Director", just "Director".

However, it does seem like he is down as being a formal director.

Are you sure he is an undischarged bankrupt?

[rogerthefish]

just a suggestion
Is he doing a good job ?
Can you bring them back in house and employ him (as clearly he needs something to live on) you are going to have to be a bit more hands on but better than seeing the titles fold.