Directors Nefarious Use Of Liquidation Process To Avoid Consequences Or Discovery

[ReliaGains]

I have very basic question with regards to the employer's ability to abuse the liquidation process.

I received an award from the CCMA related to a matter involving an unscrupuloius CEO. Long story short...the company informed me that they would be taking the matter for review with the labour court, started the process, but after the first step they indicated that they would be liquidating.

We tried to arrange for meetings with the liquidator since April (without success) and just found out the company had changed it's name and landed anew contract. The company profile uses the "old" company's history, trademarks and copyrights. The methodologies and most of the writings are materially the same. The old and new profiles are essentially identical. The new name does not exist on CIPRO, but the "old" company shows as being in force and, bothe profiles mentions that the business was known by the same name in years gone by.

The Question: Is the use of the this information allowed, if the old company had been liquidated, or am I right in my view that these companies are on and the same entities?

[Lawyer Destroyer]

Reliagains - credit to you for standing up. It is called or termed a "Phoenix Company" and provided it meets the criteria can be treated as the original in event of transgression of the law or investigation. Suggest you drop an anonymous line to the Registrar CIPRO and make sure they see that you have copied it to several other regulatory bodies - INSOL is a good one to copy to as well as the Chamber of Commercer (or at least the law firm that represents them in SA) .

[ReliaGains]

Thank you very much. I will do this immediately.

I hope that I am not hijacking this topic, but I have investigated the story a bit further and found some interesting "goings-on". Before the company was liquidated in March 2010, the name was actually changed in November 2009. However, the company issued with a letter in December and made a submission to the labour court in February, all in the "old" name.

I also have not been informed about anything regarding creditors meetings, or anything else, nor am I able to trace the liquidator.

[Dave A]

I also have not been informed about anything regarding creditors meetings, or anything else, nor am I able to trace the liquidator.

I have a few debtors that fall in that category. If you manage to contact the responsible person, you're told the company is in liquidation.

After some time without notices, you investigate and it turns out there's been no application for liquidation. The company is just a stripped shell waiting for someone to be stupid enough to apply for liquidation and effectively finance the tying of the bow that clears the mess away.

And then I have one international company that was liquidated in the UK - none of the local creditors got a look in anywhere in that process.

[sterne.law@gmail.com]

In terms of labour issues where a company dissappears, closes or liquidates, there is provision for what is called piercing the corporate veil. Funny enough such a thread was started in the labour forum about a week ago.
Of course the issue is that inevetiably legal action costs money and so it is that the employee or smaller person does not press on and loses out. Deciding the battle is not worth it. Unfortunately, employers or businesses who use liquidating as a means out are street smart and dont intend being fair or morale. (a thought to bear in mind is that a defendent or respondent can ask the plaintiff to put up security for costs subject to certain criteria, insolvency being one of them) Asking for R100 000 in security often gets teh tune changed!!!

Again one can argue that they hide behind or use smart lawyers to pull these "stunts" but as Dave points out they are merely doing their job. If every lawyer acted based on what they believed to be morally right - there would be no lawyers or litigation The lawyer is tasked with getting the result the client seeks

[Lawyer Destroyer]

I always wait for an opportune moment to quote this

It is opportune...

Famous Quotes / Quotations
The quotes from King Henry VI are amongst Shakespeare's most famous including 'The first thing we do, let's kill all the lawyers'. Details of this famous quote follows,

"The first thing we do, let's kill all the lawyers".

- (Act IV, Scene II).

[Lawyer Destroyer]

Reliagains,

Copy it to CIPRO in basic information fashion - and also to Werksmans Attorneys fao Mr Eric Levenstein - but send as much info as you can - send it all - mark it Private and Confidential to him.....


http://www.werksmans.co.za/people/28...Dgcq6U2IjACDxg

Thank you very much. I will do this immediately.

I hope that I am not hijacking this topic, but I have investigated the story a bit further and found some interesting "goings-on". Before the company was liquidated in March 2010, the name was actually changed in November 2009. However, the company issued with a letter in December and made a submission to the labour court in February, all in the "old" name.

I also have not been informed about anything regarding creditors meetings, or anything else, nor am I able to trace the liquidator.

[Sharron]

Hi There, my ex- employer, liquidated his company because he never paid VAT, or registred any employees at SARS, the company just continued under another new name
But it trades under the product name that the consumers buy
How does this work , is it fraud or what?

[Lawyer Destroyer]

There is a lot of following on various aspects pertaining to liquidations and the duties of parties therein - specifically the Liquidators - and many people have contacted me and asked this question (several in direct relation to the liquidation and thread on Dr DS Grieve specifically http://www.theforumsa.co.za/forums/s...s-in-RSA/page8):-

"Does the Liquidator have a duty to recommend criminal prosecution?"

The answer is forthcoming direct from The Act itself:-

Companies Act, 1973, (No. 61 of 1973)
Chapter XIV: Winding-up of Companies
Duties of Liquidators
400. Liquidator's duty to expose offences and to report thereon


1) A liquidator shall examine the affairs and transactions of the company before its winding-up in order to ascertain-

a) whether any of the directors and officers or past directors and officers of the company have contravened or appear to have contravened any provision of this Act or have committed or appear to have committed any other offence; and

b) in respect of any of the persons referred to in paragraph (a), whether there are or appear to be any grounds for an order by the Court under section 219 disqualifying a director from office as such.

2) A liquidator shall, before lodging his final account with the Master, submit to him a report containing full particulars of any such contraventions or offences, suspected contraventions or offences and any such ground which he has ascertained.

3)

a) Any report submitted to the Master under subsection (2) shall be confidential and shall not be available for inspection by any person.

b) If any such report contains particulars of contraventions or offences committed or suspected to have been committed or of any of the said grounds, the Master shall forthwith transmit a copy thereof to the Attorney-General concerned.

4) A liquidator shall conduct such further investigation and shall render such assistance in connection with any prosecution or contemplated prosecution as the Master or the Attorney-General may require.

referenced:-

http://www.acts.co.za/company/compan...rt_thereon.htm


I would be very very surprised if the liquidators in the saga concerning DR DS Grieve failed to recommend a criminal investigation and prosecution supporting those made by other interested parties. Whilst I have not seen the specific evidences referred to in many instances, I have spoken with a number of the creditors and concerned parties and taking into account the statement by Bart Henderson, the Head of The South African Corporate Fraud Management Institute, that alone should suffice.

It is a dereliction of duty not to recommend a criminal investigation and prosecution in an instance where there are so many "Red flags" flying in the wind all simultaneously.

In the case of Dr DS Grieve (and others) who appear to have liquidated and simultaneously sequestrated, I would like to remind the creditors that there is a special provision which should not be overlooked:-

Companies Act, 1973, (No. 61 of 1973)
Chapter XIV: Winding-up of Companies
Personal Liability of Delinquent Directors and Others and Offences
425. Application of criminal provisions of the law relating to insolvency

If any person who is or was a director or officer of a company in respect of which a winding-up order has been granted, whether or not such order has been discharged or confirmed under the provisions of this Act, and which is or was unable to pay its debts, has committed any act or made any omission in relation to any assets, books, records, documents, business or the affairs of such company, which act or omission, if such act had been committed or such omission had been made by a person whose estate was sequestrated on the date upon which the winding-up of such company commenced, in relation to his assets, books, documents, business or affairs, or those of his estate, would have constituted an offence under the law relating to insolvency, such past or present director or officer shall be guilty of such offence and liable on conviction to the penalties provided therefor in the said law relating to insolvency, and all the provisions of the said law relating to insolvency shall mutatis mutandis apply in respect of such act or omission, the method of establishing the same, and such past or present director or officer charged with the same.

[Lawyer Destroyer]

To any victims of fraud - this site gives a full description on next actions - so read it carefully and think carefully - prepare it and do it.

From memory (and a recent snippet just in which I will publish on another thread Directors Duties and Liabilities under Whistleblower section of this forum). Most of Grieve's victims have been defrauded out of in excess of R100,000.00 .....

This opens a particular route - and I recommend to the victims that they band together to do this - just get one of the victims to play head conductor and orchestrate....

http://www.whitecollarcrime.co.za/in...-to-the-police

This details reporting a fraud by a director in excess of R100,000.00 to the police in terms of Section 34 of Prevention and Combating of Corrupt Activities - öf "The Act"

I will quote the entire article later - it is by Basil Carlston and to be found on the white collar crime site www.whitecollarcrime.co.za under articles - But well worth a read - it carries a mandatory sentence in event the matter is not reported as well.....