A former director of Cap Coast Telecoms, Richard Ludwig has recently been jailed for five years with a non-parole period of 20 months. Mr Ludwig had previously pleaded guilty to dealing with proceeds of crime and breaching his duties as a director.
Richard Ludwig was the director of the Cap Coast Telecoms group when he sought advice from two pre-insolvency advisers in relation to the restructuring of his struggling business.
Mr Ludwig then pursued a strategy involving the issuance and payment of fake invoices. A total of $743,050 was transferred out of the company through this scheme to companies held and operated by the two pre-insolvency advisers. The company was wound-up once the funds were transferred out of the company leaving employees and other creditors with nothing and no prospect of a return from the company.
It is understood that the overall intention of the strategy was so that funds would be available to Mr Ludwig which he would then use to set up a new business.
What lessons can be taken from these circumstances?
This case highlights the importance of seeking advice from a qualified professional. There have been countless cases where purported professionals provide advice to clients which are essentially illegal, including illegal phoenix activities.
There are ways in which a business sale to a related entity can be done legally and not all phoenix activity is illegal. However, importantly, assets must be transferred out of a failing company for fair value and at arm’s length. Assets and funds can never be taken from a failing business in ways which will intentionally prejudice employees and other creditors.
If your company is struggling financially and you are finding it hard to keep up with the company’s financial obligations, you should speak to a qualified professional, such as a registered Liquidator or solicitor. An experienced professional will be able to provide you with information about the options available, including informal arrangements and settlements.
Contact us for assistance
At Pearce & Heers, we are a team of insolvency practitioners led by partners who are registered Liquidators and Chartered Accountants with decades of experiencing advising businesses and their directors.
So, contact us today for a free, no obligation discussion about your circumstances. Our experienced team will able to provide you with information about all legal options available.