Insolvency mediation

[Sarah123]

Hello there can anyone please advise who has been in a similar situation to mine? I have traded as a limited company as a small corner shop for over 10 years since after Covid when all that Bill when Sky high I was unable to keep up with electric bill only to find out it was passed onto the bailiff and the debt was about 36K I was doing every possible thing to keep the business upload and ranging the payment arrangements with the balance. It took me a full year to pay them and eventually I couldn’t keep up any more. It was draining everything out. I had. And then they threatened me disconnect the supply and other stuff so I had to take an instant decision and liquidate the company
And liquidation Till bills couldn’t keep up to them. Delhi outgoings was low on stock as well.
So basically, liquidators have put claim through the solicitors against me over £250000
My father who was an ex Director and resigned in 2014 which was 11 years before the liquidation they tried to accuse him for being a shadow Director
You have got my husband involved who has absolute got nothing to do with the company saying that he was that always FACTO de director
I was only director and my mum was a shareholder. They even got my mum involved saying that she has always acted as a director as a shadow Director.
There has That record that any of my family members has got anything to do with the company. I was the only sole signature on the check Books and the bank accounts. I was the only one dealt with the wholesalers through my emails. The only came to my email and I was the only one responding to them, I have not claimed any dividends. I have not claimed any salary from the company account. I don’t took any overdraft or any credit liquidation.
Some of the transfers went out to my husband’s creditors from my company account was to re-impressed him for the cost which he has entered for the company for over number of years and transactions are 2022 there is a mediation date even on the mediation date. I was not given any choice to pick a date to arrange a sufficient funds for the mediator. I was giving no option to do that they have mediation and they want all my family to be presented at the mediation, however they still failed to provide any documentary proof against my family. What are my options here?
Thank you so much in advance

 

[AI Helper]

Insolvency mediation – what to do next

This sounds like a liquidator (via solicitors) bringing a director misfeasance / wrongful trading style claim and trying to widen it to “shadow” or “de facto” directors (father, husband, mum). That’s quite common where they suspect decisions were being taken by others, or where money moved between the company and family. The key point is: they must prove it. Being related, helping out, or being a shareholder is not enough on its own.

On the “shadow/de facto” allegations, the usual battleground is evidence of who actually ran the company: who gave instructions to staff/suppliers/accountants, who negotiated finance, who signed contracts, who controlled the bank, who made strategic decisions. If you were the only bank signatory and the only person emailing wholesalers, keep that evidence and build a clear timeline. For your dad, resignation in 2014 is helpful, but they may argue later involvement—so gather proof of what he did (or didn’t) do after 2014.

The transfers to your husband’s creditors will be a big focus. Even if it was reimbursement, the liquidator will expect a paper trail: invoices/receipts, a director’s loan account, written agreement, and consistency in the books. If it looks like company funds paid personal debts, they’ll push “misfeasance” or “transactions at undervalue/preferences” arguments.

Practical options now:

• Ask the solicitors for a full “pleaded case” and disclosure: what causes of action, what sums, and what documents they rely on against each person.
• Get an insolvency solicitor to review before mediation. Many offer a fixed-fee advice session; it can stop you walking into a bad settlement.
• If mediation is being pushed on unreasonable terms (date/fees/attendance),ask for it to be rearranged and confirm you’ll engage once you’ve had key documents and time to take advice.
• If family members are being threatened, each should consider separate legal advice (conflicts can arise).

If you can share (without personal details) what the £250k is said to be made up of (overdrawn director’s loan, wrongful trading losses, preferences, etc.),it’s possible to point you to the most likely defences and what evidence usually wins these disputes.

 

[Sarah123]

Thank you for your reply
Yes, 250 K is based on what they say is the wrongful trade-in dividends overdrawn directors loan account
Can provide several evidence in my email and bank accounts where money has moved where my husband has stepped in to keep my business afloat checked in money in the business to keep up my direct debits and other bills

I am unemployed. I don’t have job. I have no savings or no income at the minute and solicitors are charging around £6000 plus VAT just to represent me in mediation which is not even in my affordability at all.
Is there anywhere legally where I can take advice? My mum and dad don’t want to attend the mediation in person as they are vulnerable? My mum has suffered stroke in the past and my father is have got mobility problems so therefore I’m also looking for a list for them who could represent them in the mediation. Can you advise what other help and advice can I take legally?

Thank you so so much

 

[David Reed]

At £250k I really wouldn’t try to deal with this without a solicitor who specifically handles insolvency litigation, rather than just a general business solicitor.

From what you’ve described, the fact that your husband, mum or father are family members does not automatically make them shadow or de facto directors. The issue is what they actually did and whether there is evidence that they were effectively managing the company or that you were accustomed to act on their instructions.

I would start gathering absolutely everything now — bank statements, emails with suppliers, invoices, receipts, proof of any expenses your husband paid personally for the business and why the company later reimbursed him. Those payments to your husband’s creditors are likely to be looked at closely because transactions involving connected people can receive particular scrutiny in an insolvency.

I’d also ask your solicitor to make the liquidator set out clearly, person by person, exactly what they say each family member did and what evidence they rely on. Don’t delete or change any old records.

Personally I wouldn’t agree to anything at mediation or make admissions just because you feel pressured. Get specialist advice first and go through the £250k claim line by line. Directors are not normally personally liable simply because a limited company owes money, although personal liability can arise in specific insolvency circumstances such as misfeasance or wrongful trading.

This sounds far too serious to handle on your own, especially with several members of the family now being accused.

 

[Sarah123]

Thank you, David, for the reply
I’m trying to get a solicitor involved, but they are charging a lot of money charging 7K just for a mediation process. I am currently unemployed. My in-laws are retired and my husband got his own small business. However 250 K is not only the transfer money it is overall claim they are putting on regarding unclaimed dividends which they believe I’ve taken. There has been no salaries allocated from my account to any of the family members they haven’t been signature on the bank ever.
And they give me ultimatum that if I don’t attend the mediation, they will issue the court proceedings against all of us upon asking about the evidence which they hold against other family members stated the letter of claim they believe my family has acted as a shadow and facto de director
I am finding it hard to afford this fee for the mediator and it’s gonna be even harder to source a fee to hire a solicitor