Career Clinic: Can I go after the partners if my firm goes under?

How much money do you want to throw at it...

How long is a piece of string? Not really the kind of question that is going to result in any meaningful answer in this kind of forum sadly.

If the partners continued to trade whilst the company was insolvent, then yes, their personal assets could be up for grabs.

The question that follows: Did they and how will you prove it? The insolvency practitioner may assist in that regard but you will need your own accountant on board to assist you, someone who is independent under the CPR would be a good start. Fees will inevitably be incurred without any guarantees if success. If you can prove that they traded whilst the company was insolvent then it is a route, but not a cheap or quick one and unless the sums involved are significant, the costs of progressing the matter may be disproportionate.

You know what is coming next... get independent legal advice tailored to the problem; general advice on this forum is probably not going to be overly useful.

Best of luck.

Me -06 Jan 2011 | 15:45

Prioritise

You may or may not have a case but it doesn't sound like it would be a straightforward claim given the LLP status and the fact the individuals may have their assets beyond reach in any event. Plus if there is some kind of wrongful trading etc. presumably you would not be the only creditor.

It may make sense to take high-level initial advice on it just to check it out but be careful. It could easily turn out to be a costly and time-consuming distraction from your real priority right now which should be finding another job. Consider also whether the sinking of your current firm will throw up any lifeboats - after all the work you have been doing presumably won't just disappear?

Young Fogey -07 Jan 2011 | 12:14

It would look great on your CV.

Bez -07 Jan 2011 | 14:05

The actions of the administrator should not be unduly influenced by the fact that he/she/they was/were appointed by the outgoing partners, since the duty of the administrator is to the creditors of the entity under administration.

Besides, the primary purpose of administration is to see if the entity can be maintained as a going concern, so it is possible (albeit unlikely) that you could end up keeping your job anyway. Here's to hoping that the administrators can get the job done.

DW -07 Jan 2011 | 15:30

Unlikely...

Most actions can only be instigated by the administrator, and not by individual creditors. To pursue the partners, you would have to show either (a) that the firm has disposed of its assets to the partners with the deliberate intention of putting assets beyond the reach of creditors (s423 Insolvency Act) or (b) that the partners somehow owed you an individual duty of care and had breached that duty, causing you loss.

Absent this, if you think there has been wrongdoing or excessive drawings, you would have to encourage (and perhaps fund) the administrator to pursue the partners but it would be up to them. The employees might want to seek to put a representative on the creditors' committee if the company does go into administration. (This is of course general guidance only and specific advice should be taken!!!)

Associate -07 Jan 2011 | 17:09