Dispute with builders - need to put in a small claim but worried they are going to go bankrupt

[Loueytb3]

[I've also posted this in legal but it doesn't get as much traffic]

Need advice on a dispute we have with a building company. Basically, they built us an extension no problems, really fantastic workmanship, really pleased with them. So we asked them to build some decking and do some more internal work to the house and gave them 10k for the work (not the total cost, but still a large percentage of it). At this point it all went downhill and to cut a long story short, they apparently got a large tax bill at the same time as we paid the 10k. They anticipated it would take a couple of months to sort the tax bill before getting back to normal trading again with cashflow available to purchase the materials for our decking. In the meantime, they came and constructed the base for the decking (with temporary boarding on top). They have still been doing other jobs during this time.

Having got nowhere in getting a sensible start date out of the Director (who we had been dealing with), I sent a strongly worded letter last month asking them either to do the work within a month or give the 10k back or we would take legal action. I got a holding email which said that they hoped to have a clear answer at the start of September. We then went on holiday and have just returned. I spoke to the Director yesterday who said they were waiting for a contractor to pay them and also payment from another job and then they hoped they would have the cash for the materials. He is meeting with the client on Friday and would come back to me then with a response.

However, I also spoke to the project manager who has been fab and feels awful about the whole situation. He told me that apparently they were setting up a new company (but that the Director had factored in our outstanding work). Now alarm bells started ringing because why would you do that if you had no issues trading?

I am now worried that he is going to make the company bankrupt, meaning that we wouldn't be able to recoup our 10k, and start up a new company and carry on trading.

I want to wait until the weekend to hear back from the Director as he has given his word he will get in touch, but if we don't, we will be putting in a small claim over the weekend.

We will clearly win our claim but if they have no cash (or have gone bankrupt) how will we get them to pay up?

If they have gone bankrupt can they set up a new company with the same director? Can we go after them instead?

Are they a Limited Company?

This is quite important.

I suspect they might with you speaking to the Director.

If they aren't Limited, then you should be able to go after the owner of the Company's assets including his house.

However, if they ARE Limited, then you would only be able to go after the Company's assets. If they are "experienced" they will know how to (& will have) "fence" off all of their equipment, premises, etc.

So, say for example, they have a workshop - the freehold could well be owned by the owner of the Company, but in his name, not the Company's. He would then "rent" the workshop to the Company, so if the Company was sued/went bust, the actual workshop would be safe as it was only "rented" by the Company.

It's an absolute minefield with builders & the like, especially if the Limited thing is factored in.

It's my understanding that you wouldn't be able to go after the "new" Company, even if they were in the exact same premises & yes, I'm fairly sure it can legally be with the same Director.

It all stinks doesn't it?!

Yes they are. Shit. We're screwed then. I thought we might be able to go after his personal assets if they refused to pay or went bankrupt.

No, not if they're a Limited company sadly.

Do they have offices/workshops/vehicles?
If any of the above actually belong to the company, then they are classified as assets & you'd be able to go after those - but it definitely is a long drawn out process.
The fact that they've done part of it is something, so I would hold fire at the moment with the Small Claims in the hope of making the best out of a bad job.
How much was the total quote & have they stopped because they've run out of money for the actual decking? If so - & this is providing they've still got sufficient labour - what about if you ordered the decking supplies (this would be deducted off of your total invoice/quote), then they could complete it as agreed by just supplying the labour?
It's very important that you get the list of materials from the Company, that YOU place the order & then make sure that it's delivered to YOUR address, then if they do go bust further down the line you won't be out of pocket any further.
If the Director is genuine, he will obviously want to do all he can to rectify the mess he's made, so hopefully he will speak to the decking supply company, explain the situation & ensure that you get their Company's normal discount.

They have a van but I don't expect its worth very much. I have googled the company address and it is clearly his house. However the address is "The office" at [street name] so I think he has an office in his garden. Doubt we could get anything from that. Presumably his house is safe. I have done a CCJ check and there is nothing on the current company but a outstanding CCJ against the Director from 2010 for just over 10k. There is also a previous company, with a very similar name, but different director (who is the project manager) which has been dissolved.

The total contract was 14k, we've paid 10k. The materials they have used so far would be very very cheap. The materials left to buy are more than 4k (I think roughly 7-8k). However, it might be cheaper to buy them if they will finish the job than to sue them and not get our money and have to start from scratch with a different company. The other quotes we got were around 14-15k as well.

I bet that "office" in his garden will be "rented" to his company.
You could always do a check with the Land Registry re ownership of his house - but I can't see it being in his company's name.

Hmm, the project manager you say - the same one who "has been fab & feels awful about the whole situation"?! It does sound as if they're "experienced" about how it all works doesn't it?!

Ok, so the way I suggested would give you a £3-4k shortfall, but at least that's much better than a £10k one, plus you'd have your decking completed- is there anymore work that you need doing that requires minimum outlay material wise? If so, perhaps might be the time to get it done - even if it's just decorating & you buy the paint -, but whatever you do, do NOT give them any further money.

Just a thought, did you pay by credit card by any chance?

see "section 75"

www.which.co.uk/money/credit-cards-and-loans/reviews-ns/credit-cards/credit-card-faqs/

I've learnt the hard way with builders over the years, now I NEVER pay anything upfront other than for materials that I make sure are delivered directly to me. It does make it more difficult trying to find a builder that's happy with that arrangement, but fortunately there are lots of builders.....

Can you resure me you're not in West Yorkshire! This sounds like a similar situation to the one our builder has.

We're not but they work country wide