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director possibly defrauding another director – what recourse is available?

I wonder if anyone can help please.
Eighteen months ago my husband went into partnership with someone else – both as directors – of a new firm. My husband was never involved in the running of the company he simply acted as and was treated as an employee of this company. In April of this year the other director informed my husband out of the blue that the company was in financial difficulties and was going into liquidation. He blamed salesmen saying that they had been robbing the company – these salesman deny this completely and have the necessary paperwork to show that ththe company should have been making a healthy profit.

The twist is that this other director also owns a building firm (of which he is the sole director) which has done very little work for many months (practically none in fact), however we are told by the other director that it has only been investment taken from his building company which had kept the joint business afloat for as long as it was.
He has now however, since the joint company went into liqiudation, retained the business – still at the same premises and doing exactly the same thing. He does say that he has changed the name of the company but the signage at the premises and on the delivery vans has not been changed. He has informed my husband that he has lost his investment in full and is now merely an employee of the new company. Despite numerous requests to see the company books/or to be told the name of the accountant this has not been forthcomng. When asked for this information he simply goes off on a rant and starts screaming and shouting obscenities. Consequently my husband has never seen the books of the company despite having a legal right to do so.. My husband has persevered with the situation as we cannot afford for him to be out of work, but the situation is now becomong ridiculous and we do feel that he may well have been less than honest with my husband.
We now want to bring some kind of action against him but are extremely worried about the costs of any legal proceedings. Can someone please advise what we should do? Any help would be greatly appreciated. Thank you

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3 Responses to "director possibly defrauding another director – what recourse is available?"

  1. Doctor Deth says:
    Cage Match to the Death – Thunderdome
  2. MEC says:
    I also think that the other person has been less than honest and I think your husband should contact the Citizens Advice Bureau.
    They would want to know if the business is a Limited Company registered at Companies House as well as other information about the business and its directors.

    You talk of your husband going into Partnership and also of Directors. There is a difference between a Limited Company, which is Incorporated and has Director(s) and a Company Secretary, and a Partnership between 2 or more people where each partner is joint and severally liable for debts etc.

    It is my guess, from what you have said, that the business may be a Limited Company as is the mention of Liquidation rather than Bankruptcy. It seems to me that your husband may not have been a director of the company because, if he is, he should have access to the accounts and other company information and should know the name of the Liquidators. He could make enquiries with Companies House if the business was ever registered there.

    The following links should give you some useful information:-

    1) Direct Gov.org.uk
    http://www.direct.gov.uk/en/AdvancedSearch/Searchresults/index.htm?fullText=business+in+liquidation

    and

    2) Companies House website:-
    http://www.companieshouse.gov.uk/toolsToHelp/ourServices.shtml

    I do hope you find a successful outcome to this worrying problem and hope my advice has been of some help

  3. knox says:
    I don’t mean to be too harsh but it sounds like your husband has really screwed up. How can he possibly be 18 months into a partnership and not know who the accountant is for his own business?

    You have 3 options:
    1) bear with the bad situation until it falls apart in the very near future
    2) walk away now with nothing but realize that you might have some financial liability depending on the structure of the business
    3) hire an attorney

    Probably the best course of action is to get a free initial consultation with an attorney and then weigh your options. Maybe he could write a letter to your husband’s partner for a small fee and demand copies of all the financial records of the business.

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