Taking a director of a ltd company to court

[Tika77]

So... we have been massively screwed over by a building company. The essence of a long story is that the whole contracted (JCT) amount has been handed over and builder is reluctant to finish the job, coming up with excuses.
Have spoken to Consumer Helpline, done letter referencing Consumer Rights Act etc. The next step is a letter warning them about court action and then court.
My worry is that it’s a limited company. They have already incorporated another company (and heard talk about switching bank accounts). My understanding is that a limited company can be folded up easily and we’ll have noone to take to court.
Can the directors be sued if the company dissolves?
Or we’re in a complete pickle?

In general directors cannot be held liable for company debts. Sorry.

yeah Ph47 is right LTD companies in the UK are a joke they are simply there to be abused. Taken alot of money for a job dont finish it / get taken to court lose at court on Friday re-open under a different name Monday all debts written off your money is gone forever (never mind the sodding bastard has millions in assists they cannot be touched).

I would like the German system so much more, they are so much more Draconian, if you own a company that has lost at court for example you cannot wind up your company until said court debt is paid off (and you can chase them personally as well). None of this nonsense about changing company name / director all debts judgements are null and void and you open for business as usual knowing that your money / company is safe.

Thank you for both replies. Not good nees but suspected that was the case.
Really quite horrible and a big lesson for us for the future.

You can if there is suspected fraud. Read up on 'piercing the corporate veil'. Moving assets is an indicator of fraud that courts will look for. Often though you don't get to litigation. You threaten a private prosecution for fraud (subtly obvious so your solicitor doesn't get themselves into trouble) and they cave because they do want to end up in jail.

People above are right. In general all the time debts cannot be recovered for this reason. Sometimes in some cases you can find personal liability on the directors however eg sometimes they breach copyright law or data protection laws or competition/anti-trust laws but it's hard in most standard debt cases. That is one reason solicitors and banks will encourage a personal guarantee to be given which is signed as a deed.

As said above look for evidence of fraud -eg the directors must act in best interests of the company - not siphon money off into another company - not easy to prove. The bigger the company and more established the less easily and likely it will be to move contracts, assets etc over to another entity - the smaller businesses tend to be the riskier ones to deal with.

Thank you, Racecardeiver and Xenia.

Does anyone know if part of the payment for the works had gone to the personal bank account of one of the directors - can we sue him personally for the works that haven’t been done?
We’re now quite skint and teying to finish things bit by bit and diy-ing what we can.

No you can't. Your contract was with the limited company, not the director. He may have some liability to the liquidator if the company folds and this was not a legitimate payment to him but he is not liable to you.

This is not a situation where the veil of incorporation would be lifted. There is no proven fraud. Anyway, Fraud is a criminal matter and recoveries are made under the Proceeds of Crime Act. This company issue is a civil matter.

What he is doing is not right morally but it is not illegal and many people do use it as a way to get away with not paying the money back. The idea of limited liability is that the directors/shareholders are not liable for the debts beyond their share issue. Unfortunately there are a small minority of people who abuse it.

Unless it was a lot of money, you may not be able to wind the company up - anyway if the company has no assets there is no point spending the money on that, it's throwing good money after bad and the only people who will win are the Liquidators. Chances are someone else will wind them up anyway, I bet they don't pay their taxes either!

Your contract was with the Ltd co, but
actually you may very well get somewhere with pursuing the director in court for any payments you made directly to his personal account. I saw a case recently where the customers got their money back from the director personally through the courts in the same circumstances, but only the part they had paid to his personal account. Presumably you have the receipts to prove where you paid it.