Sin TV - General Chat & Discussion

(19-07-2015 11:55 )Pixel Wrote:  I'm wondering whether these promises to pay people are just a way to fob them off and deflect legal action until they can liquidate the company? Once the company is gone then creditors have nothing to claim money from. That's what any failing company would do and is the main reason limited liability companies are set up.

Looking on the bright side, perhaps they are attempting to pay people in order to salvage their credibility and start again. However, as Elgar said, this will be a substantial sum. I can't think of another reason why they would be genuinely attempting to pay creditors, when the alternative is to dissolve the company and disappear into the night. Therefore I remain deeply sceptical.

This is an interesting post by Pixel. I must admit I've been wondering too if the promises to pay everyone might turn out to be empty promises.

Loaded Magazine is a recent example of the kind of liquidation Pixel is speaking of. After the Loaded TV fiasco built up a lot of debt, the Loaded publishing company was suddenly liquidated. Those going without pay wondered why the magazine was still being published, but another company had been formed so they could carry on with the magazine as though nothing had happened. In this case, the liquidated company was genuinely insolvent though, which is an important point.

Yes, perhaps they are attempting to pay people in order to salvage their credibility and start again. That's certainly possible. But there is another reason why they would be genuinely attempting to pay creditors, which is that perhaps the company is not insolvent at this time. Although they are clearly in a bad way financially, perhaps they are not actually insolvent yet. I mean if they have monies due to them which could be used to pay their debtors, then liquidating the company now could make the directors personally liable for the company's debts.

The principle of limited liability only works to protect directors from being responsible for debts if all the rules of running a limited liability company are followed, and this includes not liquidating the company before doing everything possible to pay its debts. A wrongful liquidation, leaving people unpaid who really could have been paid, would only make the directors personally liable for those same debts.