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Thread: CC Advice please

  1. #1
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    CC Advice please

    Hi all

    I am a small business owner, working on a commission basis only. Now, I own a CC that has been in exsistance for just over ten years. Unfortunatley, due to some bad moves in my side, I am being sued by an ex - employee in the labour court for R 96,000 (which she does not deserve, she worked for me for a just over a month, and walked out, unfortunatley I messed up and did not attend the Labour Court hearing, thus she was awarded default judgement of her salary for 2 years). So this thing has cost me over R 150,000 in legal costs already, trying to stave off this judgement, to get it rescinded, to prevent them from attaching my assets. To top it all, I owe the Revenue Service quite a bit of money, and do not see how I can pay this anywhere in the future.

    Now, I would like to get advice on this situation.

    Should I approach the Revenue Service and try and reach a settlement? I am worried I might be prosecuted and sent to jail. Or, in such circumstances, can one try the liquidation option? My Lawyer for the labour case suggest liquidation to me a year ago (to prevent the other party from attaching my assets), did not consider it at the time. However, things are not getting any better, legal fees are increasing (labour case has been going on for 2 years already), with not enough money coming in.

    Advice welcome.

    Thanks

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    Hi I come from a legal background ex legal secretary and let me give you one piece of advice never ever let these kinds of things drag out, the longer it drags out the more of an issue it becomes and the more it is going to cost you in the end. Attorneys charge you for every letter, e-mail, phone call and fax that they have to do on the file you are usually looking at R25 - R175 per correspondence and they usually charge about R25 per phone call and then add another R25 per 5 minutes this is how your legal fees grow so dramatically and this is why Attorneys drag these cases out so long. If I where you, I would go and see ASAP an Attorney that specializes in commercial law and wrap this thing up as quickly as possible. The longer you let this drag the worse it is going to get for you. A lot of these guys (mostly in the building industry) who liquidate there CC or Company due to bad debt and restart a new CC or company within a week and carry on with business as per usual. I hope you have learnt a costly lesson and will no longer put these legal issues off.

    Regards

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    Platinum Member sterne.law@gmail.com's Avatar
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    My first advice is get a new attorney. Although we dont have all the info at our disposal, the following are some pointers that may suggets you have been ripped off.
    The labour court award would have had to be taken on review. This is a relatively simple process and should not have cost more than R20 000(even this would be a lot) Even without the info in front of me, an award of 24 months for someone who was employed for 1 month, is on its own enough for a review. (The dismissal was obviously an automatically unfair, hence the 2 years salary)
    Even if for some strange reason there was a need to spend all this money on legal fees - then the best advice was pay the R96000(first try agree on a settlement or terms) and learn the lesson, it is still cheaper tahn fighting to prove a point. If your attorney advised that you would win and then get costs, then -
    You never attended the court matter, so that is against you.
    If awarded costs then they would probably been at taxable rates not at billed rates.
    In teh event you got costs - How would you get it back from an aemployee whoe earns R4000 per month? Unlikely
    No doubt your legal bill includes other stuff, but my feeling is you have been misled. If so perhaps approaching the law soceity is a good idea.
    As to attached assets and liquidating - if you have used the cc purely as a trading vehicle for a sales business, then closing it has no real affect for you from a goodwill point of view. Of course where the assets are listed is important from liquidating and attaching
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    SARS is one bunch you don't want to be in debt to either. Even if its the cc that owes the money. Typically SARS will hold members personally liable for the tax debts of the company, so liquidating the cc to avoid this may not be an option.

    I don't have any answers for you, but just thought I'd make you aware of this extra issue you may be facing.

  5. #5
    Platinum Member sterne.law@gmail.com's Avatar
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    The reality is that no matter what SARS will get their money.
    Come to an arrangement with them. You may even be able to reach a settlement amount that is lower than that owed.
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Site Caretaker Dave A's Avatar
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    Everyone seems to have done such a good job on most things. But let me touch on this fear...
    Quote Originally Posted by pop View Post
    I am worried I might be prosecuted and sent to jail.
    You can't be sent to jail for debt. You can be sent to jail for fraud or other criminal activities. Whether your mismanagement of the affairs of the CC could be seen as criminal can be influenced by your area of expertise, but for most folk it's dead easy to plead being an amateur who stuffed it up out of (some form of) ignorance, lack of experience or loss of objectivity.

    Ultimately it seems like you've lost control. Best to hand over the reins on this mess to a liquidator, keep good counsel, try to absorb the lessons in the mistakes made and focus on getting your life back on track.
    The trouble with opportunity is it normally comes dressed up as work.

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    Thanks

    Thanks all who responded to my question for the advice.

    I am changing to a different Lawyer for the labour case as of tomorrow, and will have to approach the Taxman for a settlement somehow.

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    Update

    I have handed my Labour Case over to a Firm that specialises in Labour Law, have been advised to pursue a settlement with the good Lady, as the Lawyer did a quick calculation of possible future costs should we continue to oppose / fight this issue. His calculation (rough) for his & Council's (Advocate) fees came to roughly R 45,000 (various court proceedings), so he advised (as the Lady is apparently being represented pro bono now by another Law Firm, whereas previously she was being advised by a militant half - witted wannabe failed Politician / Law School Drop out).

    I am inclined to try to settle this matter (we did try last year or the year before, they were not interested), but still have one question, hope someone can advise. As the CC has no assets, except for a bit of cash, I do not see why I can't (as advised by my previous lawyer) just let the CC run dormant and start trading under a new CC, with the plaintiff having no recourse against the new CC / myself. Been advised against this by my new Lawyer, as he recons the whole thing could boomerang and backfire, with the Plaintiff in the Labour case somehow making me personally responsible?

    I have seen instances where judgements have been obtained against the members interest in a CC when there were no assets?

  9. #9
    Platinum Member sterne.law@gmail.com's Avatar
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    Negatives of liquidation etc aside, one phrase "piercing the corporate veil"

    This allows the court to look at other business entities and see if the employer has changed business structures to avoid a labour issue. Includes getting wives as shareholders in new companies etc, etc. In otherwords the court will look at the new entity and probably conclude it is the same business in a different format.
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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