Buying company car before liquidation

I am a director of a company about to go into liquidation, my wife wrote a cheque and bought the car i drive off the company last week.

I got a written valuation off a garage on the car of 1000 and it was bought for this. However the car is probably worth a lot more.

There is no money owed on the car to the bank.

Question is will the liquidator contest the valuation and can he demand it back despite it being sold and the MD signing off on it ?

The car was purchased from the company prior to liquidation / a liquidator been appointed and was transacted in the normal course of business. A liquidator should have no business into looking at transaction prior to becoming involved.

mercman said:

The car was purchased from the company prior to liquidation / a liquidator been appointed and was transacted in the normal course of business. A liquidator should have no business into looking at transaction prior to becoming involved.

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The car was purchased just before to the companies liquidation for a price much less than purported value in the OP 's own opinion, and by the wife of a company director, and the liquidator wouldn't be interested in this transaction? At the least I would find this questionable.

The car was an asset of the company, a liquidator may well want to know more. If the difference between the garage valuation, and an estimated market valuation is large (and liquidators will be very aware of market values) I cannot see how it would be simply ignored.

The car is in a garage for a range of repairs now including respraying, engine works, tyres, bearings, suspension and other ancillary work.

If the liquidator does ask questions about the valuation from the car dealer who says
" The value of the car in the current condition is 1000" which was before all the repair work how can they contest it if they don't know what condition it was in before all the repair work?

And if they do contest the valuation will they reimburse all the repair costs?

And by the way thank you both for your valued opinions

Apart from the liquidator, if you purchased the car at a value less than it's real value, there is also a possibility of a tax liability of a benefit if the Revenue don't accept the garage "valuation".
It also depends on the extents of the debts of the company going into liquidation. If there are large groups of unpaid creditors then that can be messy too. As a director you have a legal if not also moral responsilbity in the way you and the board ran the company. I would suggest if the car is genuinely valued or close to it, then you should not have sleepless nights over this. If however you and the MD intended to pull a fast one before liquidation, your actions may well come under the eye of the Liquidator and in those cases it is often hard to predict the outcome; remember he will also want his fee and the creditors will want their pound of flesh.
Liquidation can be a difficult time and obvipusly you are out of a job too so hope it goes well for you. I find if you do the right thing morally usually means you are covered legally too as the former is far more stringent than the latter.

dolphin said:

And if they do contest the valuation will they reimburse all the repair costs?

And by the way thank you both for your valued opinions

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I assume they would use the car salesmen guide or some other reference guide for a value. By asking this question OP you seem to be indicating you feel the sale at this price could be open to challenge.

What a liquidator would do ( if anything) is hard to predict. I assume if it is challenged, you will have to negotiate on it or attempt to convince the liquidator the sale price was accurate for a vehicle in that condition and at that time.

dolphin said:

I got a written valuation off a garage on the car of 1000 and it was bought for this. However the car is probably worth a lot more.

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Difficult to comment sensibly unless you can say how much more it is worth.

mercman said:

The car was purchased from the company prior to liquidation / a liquidator been appointed and was transacted in the normal course of business. A liquidator should have no business into looking at transaction prior to becoming involved.

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Are you serious?

A liquidator is going to look at the company for the previous year - 18 months and is always going to look at any related party transactions.

If you can prove that the valuation was at arms lenght, then you should be ok, you should also have placed the funds into a seperate bank account so that they were available for the liquidator, as if you paid anybody out of them (including a bank overdraft) you could have committed an offence.

You should not get the car repaired.

You should return it to the company or at least offer the liquidator an opportuntity to reverse the transaction.

Buying an asset just before the liquidation smells bad. While it's a small amount of money, if there is any hassle down the road, the liquidator would put this transaction in his report to the Court. You are better off without this hassle.

Brendan

J.Ryan said:

Are you serious?

A liquidator is going to look at the company for the previous year - 18 months and is always going to look at any related party transactions.

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Totally agree here.

I think Mercman needs to look into what a liquidator is required to do.

One of the many liquidator duties is basically to investigate if there are any transactions that result in creditors losing out on any amounts that could be potentially distributed to them.

The selling of a car below market value to a related party would be one such transaction and in that regard I agree with Brendan Burgess. If you know it wasnt at market value reverse the transaction or pay over the correct value.

Any liquidator not mentioning this in their S56 report to the ODCE would need their head examined.

If the liquidator had the car he/she would sell it into the trade at whatever cash price he/she would get.

A car with a retail asking price of say €2500 may have a pure cash price of €1000 as the €2000 price would have a cash discount priced in, warranty, service etc.

If the difference is quite small, it will be insignificant, if however the real value of the car is €5000, the liquidator could have the sale reversed.

Thte fact that it needed repairs would of course help.

I read from the OP that the car is now in the garage so teh deed is done. Now your only course of action is to ensure that you have indeed given a fair sum for the vehicle in the condition you purchased it. I am sure as other posters have warned too that a liquidator worth their salt will investigate all these issues especially physical assets. The ROS guide to second hand vehicles and other guides CBG shouldl give you a ball park. If your 1K is not far off that amount then you have the evidence for the liquidator. If not you should be prepared to deal with the liquidator citing an honest error but be prepared to pay the true value.