Case Study 2
A situation in which a Receiver is required
This case study has been taken from a previous client of Purnells. The names of the parties involved have been changed however.
"Plymouth 1" was a Partnership which specialised in waste disposal. The Partnership was made up 2 partners who had gone from partners in business to unable to work on the same site. The situation had deteriorated to the stage where one partner could not even enter the premises of the business due to a threat of violence.
During the period in which the remaining partner ("Partner 1") was running the business on his own he purportedly transferred the assets and liabilities of the Partnership into a new Limited Company ("Falmouth 1"), drew money out of the business, lost records and any records that did remain were of a very poor standard.
At the same time as Partner 1 was setting up Falmouth 1, his son had set up a similar business ("Exeter 1") opposite to the premises of where Plymouth 1 used to trade from. Over time Famouth 1 evaporated into this new entity, Exeter 1.
A Court Appointed Receiver, Purnells, was then appointed over Plymouth 1 but was not given the powers by the court to run the business only to sell the business.
Problems were encountered by Purnells with Partner 1 due to his lack of cooperation with the Court Order and his refusal to supply requested information to the Receiver. Purnells eventually applied to the court for a commital to prison for non cooperation from the partner.
Purnells investigations led them to find that several hundreds of thousands of pounds had been extracted out of the business and eventually Purnells were able to obtain a worldwide freezing order over all of the assets of Partner 1 to force him to finally cooperate.
Following on from that freezing order meetings were held between the partners of Plymouth 1 and the Receiver where a settlement was finally reached.
This Case Study is in stark contrast to the example given in Case Study 1. This case study shows how, with the prescence of a Court Appointed Receiver, costs can easily escalate and end up swallowing all of the potential money available to the Partners, should mediation prove successful.
The potential of excessive costs is why Purnells will always recommend trying to mediate the problem between partners before advising the route of a Court Appointed Receiver. However, should appointing a Court Appointed Receiver be the only way to resolve the dispute Purnells are more than willing to act, as shown by this case study.
If you would like advice from Purnells regarding Court Appointed Receivers over Partnerships please do not hesitate to contact Chris Parkman on 01326 240 680.