Company A rents out chocolate but is not very good at this and the owner never invests in Company A. Seeing that Company A has a very bleak future the owner sets up Company B and starts selling the chocolate and is trying to sell the building that houses the chocolate. If Company A went under there would be very few assets to sell to pay the employees of Company A and other companies that would be out of pocket. All whilst the owner enjoys beach holidays.

I was told by an ex employee of this and feel sorry for the employees, although it does not effect me. It’s probably all above board but if I could do anything I would.

I’m off for a spin on my bike!

Company A rents out chocolate

I think we need to take this one step at a time…

What cocoa % is the chocolate ?

Low very low! But it’s still choco!

Did you swap chocolate for some other word? Still not sure how you rent chocolate.

Indeed. Chocolate is up there, along with sex toys and toilet paper, in things I wouldn’t really want to rent.

Did you swap chocolate for some other word?

Cream eggs?

Cream eggs?

I’m not sure the OP is that Krafty.

depends.. do I get to eat the chocolate that i rented? 😐

Transfer of assets between companies isn’t unusual, depending on how those companies are connected (or not), however if it’s clearly being used to package up debt in one entity leaving the other with all the assets value, HMRC might be interested.

The “chocolate rental” analogy doesn’t quite work TBH. but If company A was securing business loans and buying let’s say Ferraris, then “selling them” to company B for £1.00, and in the process depriving them of VAT revenue, and being wound up with massive debts and no means of clearing them and said assets were then being used by “employees” with no discernable benefit to company B. Then yes, I reckon the authorities would be investigating.

Worth checking with companies house regarding the owner(s) of these businesses?

Strangest analogy ever

I cannot follow it tbh

Very common. Lots of manufacturing companies will often have another company that say owns the buildings or machinery.

When the manufacturing company fails it’s only assets are the materials that it is working on at the time.

So company A folds on Friday but the owner of the machinery and building starts another company B in the same premises with the same machinery on Monday. I’ve seen it happen on many occasions and quite often they fail again a few years later.

The liquidator will be looking for evidence that any assets sold were sold at fair market value / on an arms length basis. If they are not then the directors can become liable, and can also end up being disqualified. Not all liquidators are so thorough though, and some people suggest they are focused on getting their fees paid and little else! The directors having beach holidays is not illegal, even if they have made staff redundant.

I believe one of the reasons Enron collapsed is they’d sold off all their assets and were renting them back to themselves – thus reducing their fixed costs. It also meant they had no assets and eventually it became clear the accounts were misrepresenting the actual worth of the company and they went bust.

If someone is too dim to be able to run a company profitably they’re probably also too dim to realise they can’t game the system for ever…

Karma will turn up to the party one day and spoil it.

If there’s anyone close who you care about that you think might suffer from this then maybe let them know your concerns, otherwise I’d stay out – as you may or may not have the full picture and you don’t want accusations coming your way

I think I need some samples of the wares in order to comment on this properly.

Seeing that Company A has a very bleak future the owner sets up Company B and starts selling the chocolate and is trying to sell the building that houses the chocolate

trying? that is slack and amateur – normally that sort of asset transfer is stitched well in advance, must have screwed mates in past not to have got sorted

After a long spell in the pub, I often considered that I’ve merely rented their beer.

As others have said, not unusual for assets to have been hived off into a separate company.

After a long spell in the pub, I often considered that I’ve merely rented their beer.

Make sure you have a pee before you leave or you will be stealing it.