The Auto Windscreen brand, along with some assets, has been bought by the company's previous managing director Nigel Davies. The assets include its freehold properties and 19 leasehold sites.
Trifords Limited, part of the Markerstudy Group, acquired the rights to the name and the other assets from the liquidators of Auto Windscreens Limited, and has pledged to create 250 jobs. Nigel Davies has been brought in to manage the new company.
So what has happened? Is it fair?
When this happens people refer to the term "phoenixing" in that a new company has risen like a phoenix from the flames.
Is it legal?
Yes, provided the rules are observed and the liquidator maximises the interests of creditors then the business assets can be sold to a "connected party" in this instance Nigel Davies the previous MD.
In this event the liquidator must satisfy himself that he/she has
- Obtained the best possible value for the assets having typically advertised the assets for sale in the media and or on the internet.
- Ensured the creditors interests are not compromised by investigating the conduct of the directors prior to the liquidation.
- The trading name of the new company is not the same or similar to the liquidated company.
(This restriction on re-use of a trade name can be lifted if the court agrees)
Often a "phoenix" will require new cash in the form of investment to get the company going. This can sometimes be a stumbling block too. As can the fact that the new company may have to take on the employees employment rights from the old company (TUPE). However, in this instance all 1000 staff were made redundant and so it was not an issue.
