Stressful Court Case Stopped in its Tracks by Voluntary Liquidation

The Director of an IT Consulting company was at his wits end stuck in the middle of a protracted court battle.

We received a call from the wife of a Director of an IT Consulting company that was stuck in an ongoing court battle over the terms of a contract. She was worried he was on the verge of a breakdown. He believed he was in the right so he had kept fighting the court action but it was to the detriment of running the business. But funds were running out! There was a large legal bill due and the director didn’t know how it could be paid.

The director was in no fit state to discuss the matter so we worked with the wife as a go between. We established that the company had little in the way of assets. All of its income was a result of the “personal exertion” of the director. So we recommended they put the company into voluntary liquidation.

When a company that is involved in a court case enters liquidation, there is a “stay of proceedings” issued against all legal actions against the company. The opposing party can apply to court for leave for the action to continue but the courts are cautious about granting such leave and generally prefer that the matter to be handled within the liquidation process.

The director went ahead with the liquidation, and we informed the other sides lawyer immediately after appointment. As is the case with most situations like this, they saw the liquidation as an indication they were unlikely to get any return from the dispute and so chose not to apply for leave to continue the case.

The director was relieved the court case was over and now trades successfully in a new company.