The law and sisu (1 Viewer)

[Senior Vick from Alicante]

This one is probably for OSB to venture a guess at. If I was rich enough to buy a medium size company say worth 50 million for arguments sake. If I ran the company down on purpose by selling its assets to cover day to day running costs whilst saddleing the company with unrealistic management fees for doing this, eventually leading to the the company being placed into administration and or liquidation would i be breaking the law. Obviously the management fees are for doing nothing and all i would be doing is making charges for doing nothing on paper so that i could get back maybe 5p in the pound should the company be sold on by an administrator in the future. Would i have to prove to the administrator i had actually done anything to levy those charges against the company in the first place, one would of thought that if you did not you would be defrauding any potential investor or purchaser of getting the business at a fair and equitable price? Not that this could ever happen to any company that I know of course.

 

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[SkyBlueBlood]

It could be seen as maladministration and deliberately avoiding paying creditors by falsifying the amount of debt to yourself. Sadly that would be against the Directors not SISU.

 

[oldskyblue58]

Got to ask Senior Vick if you own all the shares who are you defrauding? There is no responsibility to a future purchaser as they would only pay the current market value. Management fees are not unusual and can have plenty of different bases of calculation.

What might be going on can be distasteful even feel immoral but like or not isnt illegal

 

[psgm1]

This one is probably for OSB to venture a guess at. If I was rich enough to buy a medium size company say worth 50 million for arguments sake. If I ran the company down on purpose by selling its assets to cover day to day running costs whilst saddleing the company with unrealistic management fees for doing this, eventually leading to the the company being placed into administration and or liquidation would i be breaking the law. Obviously the management fees are for doing nothing and all i would be doing is making charges for doing nothing on paper so that i could get back maybe 5p in the pound should the company be sold on by an administrator in the future. Would i have to prove to the administrator i had actually done anything to levy those charges against the company in the first place, one would of thought that if you did not you would be defrauding any potential investor or purchaser of getting the business at a fair and equitable price? Not that this could ever happen to any company that I know of course.

NO what WOULD be illegal is if they run up debts etc KNOWING they are unable to repay them; or if they buy goods and equipment and then sell them off to themselves at a vastly reduced price just before ceasing to trade (i.e buying cars on the businesses account, then selling them to yourself for a pound - thereby the company making losses from the sale of those company assets). Knowingly trading while you know you are going to go bust is a big big no no - but charging management charges isn't!