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QLD Unpaid Invoices - Previous Owner in Jail, New Owners Liable?

Discussion in 'Commercial Law Forum' started by snuzzyb, 8 August 2014.

  1. snuzzyb

    snuzzyb Active Member

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    We own a business, and supplied products to a client for use in his business, with an invoice. 3 weeks of emailing requests for payment & phoning his mobile - no answer. We finally get through to the office to be told he's gone to jail, new owners have taken over and they're not going to pay the debt. He is listed as a Pty Ltd company (has an ACN). The trading name hasn't changed. Are the new people running the business liable for the debt under commercial law? Do I commence with Small Claims Court against the Business name? Debt collectors?

    Thank you.
     
  2. DennisD

    DennisD Well-Known Member

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    Hi snuzzyb

    Did you invoice the individual, or the Pty Ltd entity?

    If the Pty Ltd entity, the debt lies with the company, not the individual, regardless of changes in equity ownership of the company. In that case the company itself is liable. If it fails to pay due sums and its debts, yes out of pocket parties can take action against the company
     
  3. snuzzyb

    snuzzyb Active Member

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    Thank you Hugh, I'm sure you've saved me a lot of time.
     
    John R likes this.
  4. snuzzyb

    snuzzyb Active Member

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    We invoiced the Business name, which is listed with Asic as a Pty Ltd.
     
  5. Rod

    Rod Well-Known Member

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    Then you pursue the Pty Ltd for the debt. A Pty Ltd is a separate legal entity and can be sued for non-payment of debts. You sue the company (trading as....), not the business name.
     
  6. snuzzyb

    snuzzyb Active Member

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    Thank you.
     
  7. John R

    John R Well-Known Member

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    Any progress with having your invoice paid by the business @snuzzyb?
     
  8. snuzzyb

    snuzzyb Active Member

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    Hi John, not yet, I sent them a Letter of Demand by registered mail, with 7 days notice, which is due to run out, I'm then off to the Courthouse to get paperwork for Small Claims & begin that process.. hoping they decide it's in their best interest to simply pay what's due..
     
  9. CAS

    CAS Member

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    I hope it's a considerable sum, if it is petty, to save yourself time and hassle, write it off as a bad debt. These things can drag out for a considerable amount of time. But if it's considerable, go as hard as you can. But definitely, Pty Ltd , buy a company and pre-existing debts come attached (unless accounted for at settlement). Let us know how you go.
     

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