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[Gary Low]

Hi. If clients move to another supplier (Co B) of their own free will that happens to be owned and operated by the same people as their current supplier (Co A) and then Co A subsequently fails, is Co B considered to be a Phoenix business which should have paid the old company for assets or goodwill?

[Graham Wilson]

Hi there Gary and welcome

The answer to this really depends on whether the new business does exactly the same things and looks exactly the same as the old one. If so, when the old business fails, the liquidator may choose to investigate the new company to see whether it has in fact taken goodwill from the old company which should have been paid for or indeed has been the cause of its failure.

[Derek Cooper]

Hello Gary

You need to be very careful in this situation. If the old business is at risk of failure and the directors of this business were aware of the problems but just went ahead and set up a new company, this could be forced to close by the liquidator of the old business. I suggest that you take advice as soon as possible on this.