Following a three-year investigation and legal battle, Leading Corporate Recovery have recovered a total of £176,871 from three former directors of IPD Furniture Ltd, after cash was wrongly paid out of the company’s bank account at a time when the company was insolvent.
The company, which was based in Dereham, Norfolk, was forced into Administration in June 2014 by a former employee after an Employment Tribunal Award went unpaid, and Jamie Playford was appointment Administrator.
During investigations into the company’s failure, Leading Corporate Recovery ascertained that the company’s freehold property had been sold to the pension fund of two of the directors and the sale proceeds of around £220,000 had been correctly paid into the company’s bank account. However, Leading identified that immediately following the sale, the company paid out approximately £212,000 of these funds to the directors and other companies under their control.
Norwich solicitors Leathes Prior assisted with putting together the legal case against the directors with the input of a senior insolvency barrister. Both Leathes Prior and the barrister acted on conditional fee agreements due to their being no monies available to fund legal fees.
The claim was put to the directors, who initially rejected it outright. However, after significant discussions and negotiations, the directors eventually put forward a settlement offer that was accepted by Leading and a total sum of £176,871 was received as a full and final settlement.
Jamie Playford of Leading Corporate Recovery said: “This was one of my longest-running litigation cases, but it goes to show that with a simple strategy of setting out our claim from the start and putting the pressure on the directors more as time went on, added to lots of determination and patience, has eventually given us a good result.”
Jamie added: “Directors need to understand that if their company folds, their actions will be reviewed and they need to be able to justify why they did certain things, especially when it comes to paying money out to some suppliers if others are not being paid. On this occasion the directors could not justify the payments and so the vast majority had to be repaid. Directors need to speak to an insolvency practitioner at an early stage to ensure they do not fall foul of the law.”
