back to article Data-breached Guntrader website calls in liquidators, is reborn as Guntrader 2 Ltd

A British firearms sales website's owner has called in the liquidators as his company faces data breach lawsuits – while continuing to trade from a newly incorporated business. Guntrader Ltd entered a creditors' voluntary liquidation on 22 October. Its director, Viscount Alexander Andover, was appointed on 21 October as the …

  1. Jim Mitchell

    Next time I get sued, I'm going to change my name and move down the street. Sounds like a great way to avoid responsibility! Wait, you're telling me this only works for companies?

    1. Natalie Gritpants Jr Silver badge

      Yes, it kind of is the whole point of a limited company. The limit is on the liability of the owners.

      1. PC Paul

        I can sort of understand that, but it shouldn't extend to legal liability for information leaks etc. Companies absolutely shouldn't be allowed to close down on Friday then reopen in the same office with the same people running it on Monday with the slate wiped clean, that's ridiculous.

        1. JimboSmith Silver badge

          I remember somebody telling me how one of their ex-employers had several companies set up ready to start trading should there be a problem with the first. There were reasons why it was his ex-employer, once he'd worked out they.weren't a kosher company he left.

      2. NoneSuch Silver badge
        Joke

        Raised eyebrows at the Home Office today when the leaked list of gun owners was compared to official databases.

        Armed police will be quite busy over the next few weeks visiting those on one list, but not the other.

        1. Anonymous Coward
          Anonymous Coward

          It wasn't a leaked list of gun owners. It was a leaked list of people registered on a website. Maybe they'd registered as members of a rifle club, and were window shopping for the sort of thing they might buy in future.

      3. DS999 Silver badge

        Limited liability

        Means the owners can't be sued personally for losses sustained by the company. But this shutdown due to anticipated losses seems more like "owners raid the corporation for every penny and other assets that aren't nailed down then enter liquidation immediately after" which is NOT how limited liability is supposed to work.

        In practice they often get away with it, because they can act like they didn't know the company was going to go under. That claim is a lot harder to make when they admit it in a public Facebook post though.

        I wouldn't be surprised if a lawsuit is filed against the owners to claw back any type of dividend or other distribution of funds made shortly before they enter liquidation. That lawsuit might possibly be successful based on their rather stupid Bond villain practice of describing their plan in detail!

        1. SCP

          Re: Limited liability

          More like they were caught monoblogging.

        2. Alan Brown Silver badge

          Re: Limited liability

          Limited Liability constrains the liablities of the SHAREHOLDERS ONLY

          It does NOT constrain the liabilities of the _directors_ or the _managers_ (frequently the same people) for poor decisions or reckless operations

          The liquidation is allowed to be contested for cases like this and the ICO should have already done so

          As the previous poster has stated, what was posted on Facebook amounts to sufficient evidence for "piercing the corporate veil" and essentially destroys all protection the new and old owner(s) may claim

      4. Jim Mitchell

        A company is just of a group of people who have come together for a common purpose. Much like a street gang, but with a legal underpinning. That aside, does liability fall solely on the "company" for actions undertaken and mistakes made by the employees, management, officers, and owners of said company? If I'm going to sue Guntrader 1.0, LLC for some perceived infraction, why can't I also sue the directors personally in an attempt to make myself whole?

    2. maddoxx

      Can really anyone sell guns in blighty?

      1. rg287 Silver badge

        Well yes. How do you think gun owners get their guns? If you own a gun legally then you can sell that gun to another person - provided they have the appropriate paperwork to acquire the firearm (or are over-18 for airguns).

        Of course it all has to be face-to-face, no mail-order.

    3. Doctor Syntax Silver badge

      Perhaps the claimants should be looking at the clauses in the DPA which refer to the responsibilities of individuals.

    4. Phil Kingston

      Dude, you don't even have to move

    5. Cliffwilliams44 Bronze badge

      When I lived in Georgia (US) this was common practice for home builders. Build as many shoddy homes as they can, Sell them with arbitration contracts and a 3rd builder warranty and when the claims start piling up just dissolve the company, Let the warranty company pay out the claims and then open up under a new name. Rinse repeat.

      They all would use the same warranty company over and over. I never understood why the warranty company would not investigate the owners of the "new" companies and refuse to warrant their homes. Maybe is a sum game, maybe a majority of the home buyers never file a claim and just accept the shoddy work and the expense to fix it.

      1. Alan Brown Silver badge

        phoenixing like that is pretty much standard practice the world over in the building trade. I think warranty companies price it into their operational models rather than going after the fraud

  2. PhillW

    This just seems to be some plaything of the landed gentry:

    https://find-and-update.company-information.service.gov.uk/company/03413836/officers

    I count only about 2 chins amongst that lot.

  3. jtaylor Bronze badge

    How does this work?

    I naïvely assumed that liquidation in such a case involved the original entity losing control of its assets.

    It sounds like Guntrader just shouted "liquidation" at the court, then moved its assets from one pocket to another in the same pair of trousers.

    I'd be really interested to see Guntrader v1 wound up and its assets sold off to meet obligations. Since I imagine its assets include web site, trade names, and customer data, how would those be valued? Who would be permitted to buy them and what guarantees would they have to make?

    1. Pascal Monett Silver badge

      Re: How does this work?

      Good question.

      From my point of view, it's the fault of the law. There is no justification to let a person under liquidation procedure open another company, whatever that company may be.

      One thing at a time.

      First you handle the liquidation issue, then you start over.

      Here, it is apparently allowed to open multiple companies although one of your existing ones is being scrutinized.

      I think it would be good to put a stop to that, by mandating that anyone owning a company that is in liquidation cannot open new companies until the procedure is over.

      1. ragnar

        Re: How does this work?

        I'm also interested. I was under the impression that the corporate veil could be lifted when directors use liquidation as the means to avoid legal obligations.

      2. Stork Silver badge

        Re: How does this work?

        There can be completely legitimate reasons for owning more than one company at a time. This operation does not immediately seem to be one of those.

        In Denmark I think (IANAL) that if it was found part of fraudulent behaviour would get you barred from serving as manager of a company.

        1. Pascal Monett Silver badge

          Owning more than one company is not the issue.

          Starting a new one when there's a liquidation of one of your existing ones underway is.

          1. Doctor Syntax Silver badge

            That wouldn't be a very effective provision. Just form the new company, then start to liquidate the old one. There does need to be a provision in law to deem the new company as being the same entity as the old one. That would put a stop to a lot of the shenanigans. In fact, I wonder if there's any provision in existing law to prevent a judge coming to that conclusion.

      3. lglethal Silver badge

        Re: How does this work?

        If I read the article correctly, the owner started the new firm a month before declaring liquidation. So there would be nothing in your rules to stop him doing it. It does show significant intent though. And I hope he gets slammed for that.

        But I won't hold my breath...

        1. Pascal Monett Silver badge

          So he pre-empted the investigation.

          I'm sure the law can find a way to suspend that - if it wanted to.

        2. alain williams Silver badge

          Re: How does this work?

          I have not looked but it was probably a pre-pack sale. This is a sale of the company assets done before anyone except the managers know what is going on. Liabilities are left - ie unsecured creditors get little/nothing - which can include employee pension payments, etc.

          1. jtaylor Bronze badge

            Re: How does this work?

            "it was probably a pre-pack sale. This is a sale of the company assets done before anyone except the managers know...."

            As I understand it, a "pre-pack" bankruptcy is when the key people (e.g. owners, creditors) agree on a plan first, then present that plan as part of their court filing. If the judge finds that the plan is legally valid and is accepted by enough creditors, then it's done. Nice way to reduce legal fees, but as you say, a majority of creditors can use it to exclude low-priority claims from the conversation.

      4. Paul Hovnanian Silver badge

        Re: How does this work?

        This may be a case of a parent company opening a second (third, fourth, etc) company while one is engaged in a bankruptcy proceeding. It certainly isn't against the law for me to invest in other entities while one is being liquidated.

        The issue will probably turn out to me the transfer of contracts and customer records and the timing of such transfers relative to the bankruptcy filing.

        1. Anonymous Coward
          Anonymous Coward

          Re: How does this work?

          Parent company probably owns all the assets. Office equipment, furniture, IP, etc.

          Company A leases all the assets, get into trouble and liquidates.

          Company B starts up and sets up new leases from parent company.

          Rinse and repeat.

        2. Alan Brown Silver badge

          Re: How does this work?

          "The issue will probably turn out to me the transfer of contracts and customer records and the timing of such transfers relative to the bankruptcy filing."

          IIRC the liquidator can go back several YEARS before the date of filing, so creating and transferring a new company a month before isn't going to wash out unless there's a nod and a wink to a blind horse - which might well have been the case with a lot of such phoenixings but this one is getting extra special attention and now the liquidator is going to get some scrutinisation too

      5. Anonymous Coward
        Anonymous Coward

        Re: How does this work?

        While I agree with your reasoning, liquidation often takes many years to finally be resolved.

    2. johnfbw

      Re: How does this work?

      Technically selling assets for zero value - which is presumably what has been done here is an offence and the liquidators should reclaim the assets. This would include member lists, website, and potentially goodwill (though completely abstract)

      Deliberately stealing assets is theft

      Sadly I have seen too many times where liquidators fees magically happen to be the amount left in the companies bank account and they just say there is nothing left (they get the first slice of the pie)

      1. MatthewSt

        Re: How does this work?

        In this day and age with GDPR can you sell a member list or would you need to obtain consent first?

      2. Paul Crawford Silver badge

        Re: How does this work?

        A short while ago we discovered a new legal phrase that might apply here of gratuitous alienation where attempts are made to evade liability claims by selling/transferring assets at below market value.

  4. Howard Sway Silver badge

    The Viscount may yet have to "Andover" the cash

    Section 216 of the Insolvency Act 1986 dictates that directors of a company in the 12 months before its liquidation, cannot act as the director of a new company with the same or a similar name for five years.

    There are a few exceptions, but I don't see these applying if you just start up again the next day with almost the same name and director. This case will probably end up being tested in court I would imagine. As regards the similar names :

    "The ‘prohibited name’ restrictions include any name the liquidated company has been known by at any time in the 12 months immediately before the liquidation. This might be the official company name registered at Companies House, a trading name, or any name that’s similar enough to the registered or trading name to suggest an association with the liquidated company. The objective test for whether a name is too ‘similar’ is if a reasonable man on the street would believe the liquidated company and the new company are in any way connected based on their names alone."

    1. Anonymous Coward
      Anonymous Coward

      Re: The Viscount may yet have to "Andover" the cash

      you think a "lord" is going to get prosecuted, lol

      really fucking funny...

    2. A Non e-mouse Silver badge

      Re: The Viscount may yet have to "Andover" the cash

      I think the trick is to have multiple companies, all with very similar names, from the off. It also helps sow seeds of confusion as to which company a claimant needs to serve papers to. It works even better if you can split your business activity between them all so that each one has minimal assets.

    3. TimMaher Silver badge
      Happy

      Re: Reasonable man on the street

      What happened to the Clapham omnibus?

  5. maddoxx

    anyone can open a guntader company?

    I was just thinking there must be some clearance to open a firearm business

    can this be done by anyone in the UK?

    even with a company they left with this problems?

    1. rg287 Silver badge

      Re: anyone can open a guntader company?

      I was just thinking there must be some clearance to open a firearm business

      can this be done by anyone in the UK?

      even with a company they left with this problems?

      They’re not a Registered Firearms Dealer. They’re basically eBay (rather than Amazon) - they never legally touch the firearms. They just provide the marketplace to connect buyers and sellers.

      It’s up to the transacting parties to check each other’s paperwork.

      You are correct that if someone was actually a Registered Dealer and wound up an entity in such a fashion, the Police would take a dim view on whether they were still considered “fit and proper”.

      1. Anonymous Coward
        Anonymous Coward

        Re: anyone can open a guntader company?

        Sounds like the Firearms Dealer legislation needs urgent updating to include marketplaces such as this. Anyone with names and addresses of firearms buyers and sellers should be subject to just as much of a licensing requirement as traditional gunshops.

        1. rg287 Silver badge

          Re: anyone can open a guntader company?

          Sounds like the Firearms Dealer legislation needs urgent updating to include marketplaces such as this. Anyone with names and addresses of firearms buyers and sellers should be subject to just as much of a licensing requirement as traditional gunshops.

          Why?

          Firearms Licensing is designed to regulate who is fit and proper to possess and trade in firearms. Why would you try and bolt in some sort of data protection regulation onto that?

          Data Protection is regulated by GDPR.

          Whilst the names and addresses of firearm buyers/sellers are indeed sensitive, they are by no means uniquely sensitive - no more so than health data, case worker notes relating to domestic abuse or substance addiction, HR employee/disciplinary files, etc.

          Saying that any person running an online marketplace needs to be an RFD would be an insane exercise in box-ticking.

          "Will you trade in firearms?"

          No.

          "Will you store any firearms on-prem?"

          No.

          "So you'll never take possession of any firearms?"

          No.

          "Is your data stored securely?

          Oh yes. In accordance with GDPR.

          "I have no idea how to assess that, so I'll leave that to the ICO."

          There are also many, many old-school phpBulletin forums knocking around with a sales board. Again, none of those are going to bother getting RFD status so that users can post gear for sale.

  6. Anonymous Coward
    Anonymous Coward

    The Twitter thread is shocking, but I expect nothing else.

    https://www.thegazette.co.uk/notice/3905852/

    I used to have to look at the Gazette for work and this kind of thing did my blood pressure no good at all ...

    1. DevOpsTimothyC Bronze badge

      I did note the personal liability portion of

      without the director committing a criminal offence and in the case of the carrying on of the business through another company, being personally liable for that company’s debts

      So is Alexander Charles Andover personally liable for the old company or new company under that statement ?

      I'm guessing as it was a statement for the old company (so the name can be re-used in the new) the personal liability element is for the old company. Can anyone confirm ?

      1. Anonymous Coward
        Anonymous Coward

        he's a "lord" so it's funny you think he'll have anthing thrown at him.

        Company directors get away with this shit all the time.

  7. BridgesRBetter

    Their website gets a "Failing" grade from the Mozilla Observatory

    The Mozilla Observatory (https://observatory.mozilla.org) is a tool that is geared towards informing website owners of best practices for securing their sites.

    The www.guntrader.uk main page gets a Failing grade. Their user registration page scores a "D minus".

    Have they done anything to protect their customer's information going forward?

  8. Anonymous Coward
    Anonymous Coward

    So they admitted the offence ?

    Pretty certain that if intent can be shown when phoenixing a company it renders any VAs invalid and the directors open to prosecution.

    Limited liability has only ever covered companies that act legally.

  9. Aristotles slow and dimwitted horse Silver badge

    I'm pretty sure...

    I'm pretty sure if I had a Directors loan to about a 1/3 of the value of my company, and then liquidated said company to mitigate other liabilities - that HMRC would be all over me like a rash... will be interesting to see how that plays out.

    1. H in The Hague Silver badge

      Re: I'm pretty sure...

      "I'm pretty sure if I had a Directors loan to about a 1/3 of the value of my company,"

      I'm not an expert, but wouldn't the director have to repay the loan when the company goes into liquidation?

      1. DevOpsTimothyC Bronze badge

        Re: I'm pretty sure...

        That's the point. One of the old tax avoidance tricks was for the directory to "borrow" funds from the company.

        As it was a loan rather than salary, dividends or some other taxable payment then there was no tax. After a few years the company would be made insolvent and the debt would be written off. The directory would setup a new company and be trading under the new name.

        It's only a few years ago that HMRC realizes that some people were doing aggressive tax avoidance in that way and started going after company directors who had closed companies where they owed the company significant sums.

  10. This post has been deleted by its author

  11. DrXym Silver badge

    Hmmm

    I'm not sure saying the quiet part out loud is a good idea if this goes to court.

  12. Anonymous Coward
    Anonymous Coward

    Limited company, protection and liquidation

    I have a little personal experience in this area hence AC.

    From my perspective there are legitimate grounds for using the protection of a limited company and for becoming a phoenix (reopening under a different name).

    My small business was registered as a ltd co. primarily because if I got sued personally for some kind of issue with a business that didn't make much profit at the best of times, I could lose my house, my savings etc. I closed down primarily to retire but I had a long-term employee who'd be entitled to a redundancy payment greater than the annual profit. By liquidating HMRC paid that, a drop in the ocean compared with the tax & NI they'd had from the business over the previous 25 years.

    I ensured all my suppliers had been paid before I started the process, small businesses come last in getting any cash released by the liquidation (often bugger all left after the liquidator and then the tax man). I didn't want to be the start of a domino process where, because their bills were unpaid, other small businesses might have problems. The insolvency practitioner was an eye-opener, £300 an hour... He did fail to identify that some assets might have some value such as domain names or client list. I couldn't have sold the business as a going concern because the redundancy liability would have been greater that the value of those assets.

    I then hit another issue, the former clients needed ongoing support, essentially they needed it from me. After a few months only 3% had found someone else to provide those services and people were still asking me for help. I created a new ltd company (same reason as before, a need to protect my personal assets) but operating on my own with no office and staff overheads and just providing that support, not taking on any significant new commitments. Six years on, still doing some work for about 80% of the clients of the old business. It's only a few hours work a week but I'd still like to fully retire. With no liabilities what's left is saleable if I can find someone with the budget and skill set.

    Of course this in no way justifies what guntrader appears to have done but I recognise that liquidation is an escape from potential costly litigation. If the only losers are some chancers hoping for £££ compensation for the leak, my sympathy for them is limited. On the other hand fully behind any activity by ICO, NCA, Police, investigation of Insolvency Act violation, or into possible questionable reallocation of assets.

    1. Anonymous Coward
      Anonymous Coward

      Re: Limited company, protection and liquidation

      "By liquidating HMRC paid that"

      WE paid that, YOU failed to pay your employee what they were owed and took the dodgy way out.

    2. chris street

      Re: Limited company, protection and liquidation

      " I closed down primarily to retire but I had a long-term employee who'd be entitled to a redundancy payment greater than the annual profit." - and you failed to recognise this liability, and decided to foist it off onto us the taxpayer?

      HMRC should throw the book at you.

  13. Anonymous Coward
    Anonymous Coward

    RE: Limited company, protection and liquidation

    @AC: So you liquidated your company to avoid your responsibility for paying your employee's redundancy. You got HMRC (ie. funded by taxpayers) to pay the employees compensation instead. "I recognise that liquidation is an escape from potential costly litigation", I'll correct that for you "I recognise that liquidation is an escape from my financial responsibilities".

  14. Richard Pennington 1
    Pirate

    Limited company or not ...

    ... it sounds like they have a lot of pissed-off (former) customers. With guns.

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