The forces of good prevailed over those of evil yesterday. It doesn’t happen every day, but it is heartening to know that just occasionally the system works as most fair minded people think that it should.
We had recently been consulted by a lady who some 7 years ago resigned her position as a director of a small company. This occurred at the same time she had entered into a Personal Insolvency Agreement (PIA) with her creditors. The effect of the PIA was to forgive her debts that had been incurred during the period prior to the Agreement. She paid off her creditors, and was continuing to do so under the terms of the Agreement. All well and good, said client could get on with her affairs, safe in the knowledge her creditors had been looked after on terms with which they were happy.
Or so she thought. In 2013, the director who replaced Mrs Client placed the company into liquidation. And, in January this year (7 years after she resigned as a director), liquidators commenced proceedings against her in the courts in NSW. The liquidators were claiming just short of $80,000 due, they said, for breaches of her duty not to allow the company to trade while it was insolvent (commonly referred to as ‘insolvent trading‘). She was being sued for the company’s debts, said to have been incurred over 7 years ago. When she rang them and explained there must be some mistake because the PIA was supposed to have cleared her of any debts, she was told by the liquidator’s lawyers, ‘no, no mistake. We want your money’. She, and her 4 young children, stood to lose her home because of the potential of this claim.
In an understandable panic, Mrs Client consulted Sajen legal. Mrs Client was promptly advised that the said liquidators did not have the veritable leg to stand on, and that the claim against her was indeed a ‘try on’. Sadly, in the legal game we see too many instances of persons utilising the legal system as a form of ‘greenmail’, taking advantage of people’s lack of understanding and faith in the system to unreasonably extort money from the unsuspecting and trusting souls. We promptly delivered a suitably stern letter, setting out the apparent errors in the liquidators’ claim, and the likely consequences to them both personally were they to proceed with their claim. In less than 48 hours it resulted in the claim being immediately withdrawn by the liquidators and a very happy Mrs Client. Yay for the good guys!