Holly Ltd, trading as a holiday lettings agency, was incorporated early in 2013. The company is now in compulsory winding up: the winding up order was made on 10th May 2016 on a creditors petition presented on 28th February 2016. Peter has been appointed liquidator.

Holly Ltd had an issued share capital of 100. Trading was initially funded by a loan from NorthEast Bank plc (guaranteed by Holly Ltds directors) and further personal loans fromHollys directors.

The company made a small profit during its first Spring/Summer season in 2013, but made losses through Autumn and Winter 2013-14. Again a small profit was made during the Spring/Summer of 2014, but further (larger) losses were made during the Autumn/Winter. At the end of 2014 the directors took the decision to keep trading in the expectation of larger profits during the summer of 2015 and consistently sought early payment of holiday balances from customers while delaying paying creditors to improve cashflow. Unfortunately business was slow throughout 2015, and although the directors borrowed further money (from family members) in order to advertise more widely the business continued to decline and traded at a loss throughout the year and into 2016.

Peter has discovered that on 5th November 2015 the company paid off its bank loan. On 8th January 2016 the company transferred its office equipment to another company, Cottages Ltd, which has the same shareholders and directors as Holly Ltd.

Advise Peter:

Whether action should be brought against the directors for wrongful or fraudulent trading,