https://www.hfw.com/Piercing-the-Corporate-Veil-Dec-2012
This is great summation on the corporate veil.
The reality is you have check every business you deal with.
Unless you’re in for seven figures then going after trading while insolvent is a white elephant
Caveat emptor.
The practical problem with going after Directors of Ltd Companies, even where they did something pretty obvious, is that you can’t use the standard street corner solicitor for corporate litigation. A good lawyer will start at 10k, and as a result 5 digit amounts aren’t worth chasing.
One way to establish a personal liability for company debts would be if a personal warranty was made e.g. a Director of an FTO said to a customer “your money will be held in escrow”. This is pretty unlikely; the sort of people who run FTOs are old foxes and aren’t going to make a basic mistake like that.
I’m not sure what you mean by “insolvent trading” being another matter.
“ Trading whilst insolvent is a legal term used to describe a business which continues trading when it cannot pay its debts and its liabilities are greater than its assets. This action can lead to a breach of several provisions of the Insolvency Act 1986.”
I’m not sure what you mean by “insolvent trading” being another matter.
We certainly have a concept of reckless trading and fraudulent trading which both involve insolvency. There have been plenty of cases in Ireland where the corporate veil has been pierced as a result of such activities. Taking deposits from students when you knew you wouldn’t be able to provide the services, or should have known, could well be examples of such and if successfully pursued, could result in the corporate veil being pierced.
They are of course usually challenged and are expensive undertakings. The sums involved have to be worth fighting for, and you have to have some confidence that if you are successful that the person has the funds to pay the debt.
The concept of a Limited Company is quite heavily protected in all civilised countries. Very little one can do about this sort of thing.
I believe this statement to be absolute.
The ‘corporate veil’ has NEVER, as far as I am aware, been pierced: Commerce in the free world would collapse if it was. [ ‘Insolvent trading’ , as Peter rightly says, Is another matter.]
Interestingly, when a plane which is part of a Ltd company is ever discussed among pilots, many claim it gives no extra protection whatever. But the same criteria surely applies: Has there ever been a single case where it’s corporate veil has been pierced?
The concept of a Limited Company is quite heavily protected in all civilised countries. Very little one can do about this sort of thing.
The reason so many people pay in advance is because the schools offer them a discount.
What you can get Directors for is trading while insolvent but the burden of proof is nontrivial and expensive, and anyway does not prevent customers losing all their money. And a disqualified Director can start up again the following day, with some friend or family member in his previous post.
It’s hard for CAA to regulate business and as far as everyone is concerned finances are not their business, they are only concerned about safety and licensing fees, they never stepped in even cases of DTO/ATO going into bankruptcy, let alone frauds or scams
For airlines or retail package holidays, the CAA have a financial mandate to protect “stuck travellers” (it’s a fund that everyone pay for in their tickets) ATOL.
I paid Airways College upfront for my ATPL theory course before they went bankrupt, many people were in the same bag, I have been in those mailing list of students who lost it (including those who paid 60k upfront for integrated training, some managed to get some % of money back in courts), for those doing theory, I think DGAC managed to get some of them to sit exams with partial course or recognise course transfer to another ATO, I assumed the money was gone…
I thought the Pilot article totally missed the mark to be honest – the Fitness of character policy is for individuals that the CAA licences or approves as post holders in accordance with legislation. A DTO is a declaration, there is no approval and personnel are designated by the DTO not approved.
Peter_Mundy wrote:
Agreed – NEVER EVER pay up in front other than by credit card and yet there are still schools asking for pre-payment. To be avoided like the plague.
Agreed – I think this goes for almost everything in life!
Agreed – NEVER EVER pay up in front other than by credit card and yet there are still schools asking for pre-payment. To be avoided like the plague.
