Background

A debtor operated as a property development company, buying a property in May 2014 and selling it two months later at a significant profit. The company failed to meet the resultant capital gains tax liability and, consequently, HMRC issued a winding up petition. A winding up order was subsequently awarded and FRP was appointed as liquidators.

Action

The joint liquidators carried out a substantive investigation into the company’s business and affairs, which established a number of claims against the director and its parent company, based in the British Virgin Islands. A formal interview of the director provided key information for the claims. Sustained correspondence with various connected parties (including the British Virgin Islands parent), along with threats to bring claims, applied pressure; as a result, the director agreed to a meeting to settle the potential claims.

Outcome

The joint liquidators’ robust, proactive approach resulted in a significant settlement with the director and the parent company, representing a sizeable increase on the original settlement offer. The settlement also precluded associated parties from claiming in the liquidation, thereby maximising returns to other creditors. This resulted in a dividend to unsecured creditors of approximately 80p in the pound.