I was a Director for 6 weeks and now being sued

In 2011, I was approached to be the director of a company that I had been involved with in an investment capacity.
I foolishly accepted the role, without going into the current financial position of the company.
I quickly ascertained that something was seriously amiss, and within a couple of weeks only, I commenced to resign through my solicitors; it took a number of weeks to be replaced, and a new Director appointed.
At the time, the company owed a sizeable amount to another company, and the CEO's of both companies agreed that to satisfy the debt, the sales leads book from the company I was still director with, be transferred over to the other company; this was all done via a reputable firm of solicitors, with me signing it off about a day before ASIC registered my resignation.
The sales book in question, was a book of leads only, and these leads had to be resold by the recipient company.
As a matter of record, I had money invested in the second company, and the CEO of the second company had a shareholding in the first company.
Aside from not wishing to be the Director of the first company because the CEO and others were not forthcoming with the financial workings, or state of play of the company, I was suffering ill health with cancer, and had lost the vision in one eye.
When my resignation became final, I had nothing more to do with the company, and as a matter of fact, except for the signing off of the transfer of the sales book, I had no involvement for some weeks before that, totalling some 3 weeks.
From what I have been informed, the first company is now in liquidation, and the liquidators are attempting to serve me, and are seeking compensation of some $100's of thousands of dollars, claiming that the transfer of this sales book, caused the company losses, even though that they were unable to service the sales leads anyway; they also claim that by me, as Director, increased the value of the second company, which I had a financial interest in as an investor, and the liquidator intends to claim the investment that I have with the second company which is secured by a fixed and floating charge.
I'm quickly realising that I was sucked into something here, and was used; can anybody give me a direction, and the second company is now in liquidation, and I am fighting the liquidators of that company for my secured loans to them, and I now have no source of income to mount a defence if served

 

Once bad things happen, the more important thing is to sort out your mind for some best or worst consequences. The less the emotion the better option you would choose.

Money is hard to be ignored. I could not ignore it for quite long time. We do need it. The more the better if we could be happy. However I do consider when I should leave the Money aside. In Australia, if we have our own home house, the senior or sick pension could let us have much better life than most of people in this world. Under some conditions and after some age, we need to let the money out of our efforts, which is hard to do at very beginning.

Please don't read anything personally once you put your toes into the business or stock market. Best wishes.

 

Director for 6 weeks only

Thank you for your reply and advice.
The liquidator for the first company is aware that I am a secured creditor for the second company and wants that charge signed across to them plus the 100's of thousands in compensation; I own a house, whereas all others involved have no visible assets.
The first company, the one that signed over the sales leads, as I said, could not service the sales leads if they had come to fruition, and in essence, these sales leads ( in hindsight ) were the only assets of that company, even though they had to be worked to bring them to an actual contract.
The transfer of these sales leads was a deal done between the CEO of the first company, and the CEO of the second company, in an attempt to satisfy part of the debt from the first company to the second company.
As Director, and at a tile of ill health, which is proven, I only signed what was basically put in front of me.
The liquidators for the first company are claiming that these sales leads had a value far exceeding the real value, and I now know that the first company was insolvent, so could not possibly service these sales leads, so at the time, they would have been useless to the first company.
The financial status of the first company where I was the Director for those weeks, was unknown to me until some months after I resigned as Director, as the CEO and accountant purposely hid things from me and refused to answer any questions I put to them, with this being the first reason I resigned, aside from my ill health.
From what I now know, the credibility of the first company at the time of this was zero, so again, it was impossible for them to convert the sales leads to contracts and service them, so they were worthless to the first company, whereas the second company was solvent, and capable of converting the leads to contracts and servicing them.
As I now see it, I was asked to be a Director to be a patsy in all of this, with no member of the first company able to be a public figure; I now know that the CEO of the first company, and a couple of the shareholders raped the first company, taking all the cash assets of the company, and basically leaving a worthless shell; I also became aware, that at the time I was Director, the CEO of the first company was an undischarged bankrupt.
When I was made aware that the liquidators for the first company intended to pursue me, I approached the former CEO of the second company, as it was his solicitors who drew up the agreement, that was signed by me, to transfer the sales leads from the first company to the second company; he tells me that he informed the solicitor who drew up the agreement of my problem, and he said that I have nothing to fear; the fear is that I'm the one with assets, and to defend myself against this would cost quite a lot of money, as it's possibly a Supreme Court action, and in the meantime, I'm the one who is suffering through no fault of my own, except that I was a naive victim.

 

Please forgive my questions and some words about the faults, which could be provoking to the feelings.

Feeling is nothing when we have to sort out for our survival in business and stock market.

Thank you for your sharing.

Best wishes.

 

director for 6 weeks

Thank you for your reply.
The CEO's of both companies created the deal where the first named company transferred the sales book to the second named company.
Nothing went across to the second named company with this sales book, except the details of the potential customers, but unknown to the second named company and myself, the first named company had taken deposits from many of these potential clients, mind you, this was before I was involved with the company; these deposits, totalling a tidy sum of money in anybody's language, was raped by the CEO of the first named company in collusion with 2 of the shareholders.
As I said before, the CEO of the first named company, the accountant, and other members of that company, hid everything from myself, and from a forensic accountant that I put in place, the forensic accountant was driven out by the above mentioned people, and only lasted there 2 weeks; again, the CEO of the first named company was an undischarged bankrupt, and under ASIC law, simply should not have held that role, but nobody will do anything about it, he was simply rorting the company for what he could get, and he and these 2 shareholders disappeared 7 figures.
The CEO and accountant of the first named company just walked away and left a company that they had simply stolen everything from, including 7 figures of deposits paid by clients who constituted the details in the sales book.
The liquidators of the first named company want to sue me.
There is absolutely no use in me suing the CEO of the first named company, as he's a bankrupt; the accountant, while still in the employ of the first named company, with other members of the company, including the couple of shareholders that had stolen 7 figures, had been setting up another company doing exactly the same thing, for months before I arrived on the scene, and as I said, so as I said, I was the patsy.
In regard to the transfer of the sales book, it wasn't explained to me by the solicitor, what the possible ramifications were by me signing, in fact nothing was said except that it was an attempt to settle a part debt by the first named company to the second named company.
The second named company was equally the patsy as I was, as the CEO of the second named company was unaware that deposits had been taken on the sales leads in the sales book.
The truth of the matter is that the CEO and accountant, along with these 2 shareholders, conspired to hide that fact that they had robbed the first named company blind, and was in fact insolvent, and hide the fact from me and the CEO of the second named company and myself.
The transfer of this sales book leads, without the deposits of which we were unaware, in fact caused the second named company to go to voluntary liquidation.
I know that it's not uncommon to settle debts with stock, or in this case data.
Now, the former CEO of the first named company, is still running around, still an undischarged bankrupt, and the virtual CEO of a similar company, while the 2 shareholders, the accountant, and other members of the first named company, are operating their new company, funded by the money they robbed from the first named company.
To answer your question, when I signed the transfer of the sales book leads, I did so with the belief that it was an attempt to settle debt from the first named company to the second named company, not for personal gain in anyway, without any thought that it would improve my investment with the second named company as it is now being alleged.
What is happening now, is that the liquidator for the first named company, and the liquidator for the second named company, are simply working hand in hand, and taking every cent that either company had, in fees for themselves, and in fact the liquidators for the second named company have been doing all things possible to stop me realising any of my investment with the second named company, even though it is secured by a Company Charge, and they continually challenged the Charge, causing me to spend all my available funds on legal costs, all the while that they escalated their original estimate of the cost to liquidate the second named company to some triple the amount, without any form of consultation with the creditors they have effectively raped the assets of the second named company with all there unnecessary Work In Progress; they are equally as evil as the CEO, accountant, and 2 shareholders of the first named company.

 

Hi Qanchi

It must be a terrible feeling you are going through.

I would like to say you are not in trouble but you are in serious trouble. You must have breached your duties as director and contravened a few corporations act sections and so you could be personally liable. If you are the only director or former director with assets then they will only come after you.

It will be extremely costly to defend if they do come after you - even if you do have a defence. It sounds like there may have been an under market value transaction there.

I don't know what you can do now. You could get legal advice or you could just wait and hope nothing eventuates. Be careful about divesting yourself of your assets as you may be committing offences if you are doing this so as to prevent creditors getting hold of them. But at the same time don't go putting new assets into your name. Open a bank account in your wife's name and you pay for all living expenses and let her save her wage etc.

Also get a law book on companies and start reading as much as you can. Read up on bankruptcy too.

If court action is commenced you may want to consider offering them a settlement up front so as to avoid drawn out legal action and costs - and worry.

 

Director for 6 weeks

Thanks for the reply.
I was obviously led up the garden path to be the fall guy here.
I haven't been served with anything, but it's in the wind, and I am the only one with any assets.
I didn't knowingly do anything that was untoward, in fact, quite to the contrary, because of the solicitor involvement with the transfer of the sales leads, I thought that everything was kosher.
That same solicitor was approached on my behalf by the former CEO of the second company, and he said that I am not liable, but it would cost $10,000 to commence a defence.
Not only is the liquidator after the secured charge that I have over the second company, but 100's of 1000's in so called compensation.
The first named company, I later found out, was insolvent at the time, but I did not know at the time, the CEO, accountant, and the 2 shareholders are crooks.
Surely the solicitor who set the thing up in the first place must shoulder some blame?

 

Very dire picture. Liquidators are paid for the creditors not for the business owners and would incur the costs plus the hide losses in these two mismanaged companies. Liquidators are the nightmare to the directors and shareholders always.

It seems a matter how to save every cent you could. I traded and invested in properties and stock market. I was fury to see some huge paper profit gone in 2000 and found all to avoid to see the truth and myself. I was very painful after I lost another huge paper profit in 2011, since I know it was my fault.

Fully understand what you feel now. Ambitions can be ended at greed and fear. Self-awareness is hard. Truth tends to be hide from ourselves. Once we lose the protection, we are very vulnerable in the stock market and business.

Good luck!

 

director for 6 weeks

In regard to the second named company, I'm the only secured creditor.
I complained to ASIC about the liquidators of the second company as they were making repeated mistakes, and their WIP just went higher and higher, and I'm paying for their mistakes, then they joined with the liquidators of the first company, and cut all contact with me.
It seems that the uninitiated are the fall guys, and the so called experts are nothing but scammers.

 

Don't trust any words and experts for your money even we share words and use experts. What it means? We need to manage the experts and our words for our brain and profit.

If we are not sure what they could bring in don't use them. If owners could not care about themselves, all else would like to make the easy money.

Every time when the feeling overwhelms the consciousness in business and stock market, we pay!

 

director for 6 weeks

Thanks for the reply.
If you believe in coincidences, in the midst of these couple of postings and replies, I received an email from my former solicitors who received a letter from the second liquidators, who in essence said that they will not distribute anything from the liquidation to myself as the secured creditor until they finish examining the fact of the charge I have over the second named company, plus even on any satisfactory result on my charge, they will not distribute to me on the basis of possible legal action against me by the liquidators of the first named company.
To me it reeks of collusion.