They left my client’s RM67,000 debt in the old company and moved the business to a new one.
We had initially sent over a notice of demand and followed up for a while, but the company just ignored us. So I spoke to my client and said, we’ve been chasing them and there’s still no response. That was when my client told me there was actually a backstory to this.
They had abandoned the old company and moved the orders and customers to a new Sdn Bhd. Same premises, same staff, everything was still running. They had even sent out notices telling people to issue new invoices to the new company. Meanwhile, the RM67,000 owed to my client was left with the old company.
I compiled all this information and drafted a demand alleging fraudulent trading under the Companies Act. Then I called them. They told me in Chinese, but this is a different company, with different directors. I said, yes, I know. Different company, different directors, fair enough. But you abandoned the old company, moved the orders and customers to the new one, and continued operating from the same premises with the same staff. You even sent out notices telling people to invoice the new company. Those are the circumstances we’re relying on to allege fraudulent trading.
I told them "I suggest you seek legal advice to understand the potential criminal consequences of this, which can include jailtime."
The next day, they texted my client asking for copies of the invoices because they wanted to make payment.
There are a lot of businessmen out there who think they can just close down an old Sdn Bhd, form a new one and continue doing business while leaving the debts behind. It’s not so simple. If you’re doing this with the intention of defrauding creditors, it can amount to fraudulent trading. Think twice before assuming that a new company name and different directors will let you get away with it.
Rudi Cheu (rudi@rulecolaw.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
The User Content (as defined on Newswav Terms of Use) above including the views expressed and media (pictures, videos, citations etc) were submitted & posted by the author. Newswav is solely an aggregation platform that hosts the User Content. If you have any questions about the content, copyright or other issues of the work, please contact creator@newswav.com.
