The director facing a liability claim

When a foundation doing community work became insolvent, a really nice guy (our client) decided to continue the foundation’s activities through a limited company and purchased the foundation’s fittings and equipment etc. from the liquidator. The community benefited enormously, but a few years later his company also went into insolvency and the company’s liquidator made a liability claim against him. He was accused of improper management.

On my client’s behalf, I put forward a detailed defence to all the accusations, even though I was unsure whether this would be successful before a judge. My client was just a nice guy who wanted to get things done and wasn’t really interested in the paperwork, which can sometimes be a disadvantage.

At the same time, I made a proposal for a settlement of the debts. The liquidator rejected the defence and responded saying that the proposal was too low. I then put together a fresh defence using all the arguments and information I could find and made a new proposal, using details of his income, assets and debts to show that it simply wouldn’t be possible to recover any more from him. I supported this information with a copy of his tax return.

After a few more letters back and forth the liquidator, who was becoming keen to have the matter settled, finally agreed to a settlement for a fraction of the original claim and my client was spared having to go through long-drawn-out, costly court proceedings. And rightly so, as he really didn’t have any more funds to pay to the liquidator. This was a fortunate ending as the outcome of court proceedings was very uncertain and given that my client was experiencing symptoms of burnout the tension involved in the situation was almost unbearable for him. This way, he gained peace of mind and I ended up with a satisfied client.