• Step down subsidiary company debts

I am owed money from a UK based Sports Gambling Company that collapsed in early 2014. The UK Gambling Company is a step down subsidiary of a large Indian PLC listed on the Bombay Stock Exchange. The Managing Director and CEO of the Indian PLC were also directors of the UK company. The Indian PLC audited accounts for year to 31/3/14 show the step down subsidiary listed and the Indian company having 60.40% voting rights.  

An email I received from the UK Gambling Company last year shortly after they shut down contained this wording "the preference of the Directors of the (UK Gambling) company was to work with the shareholders to increase the capital within the company that would alleviate the problem and pay out the existing claims. The directors initially hoped that the parent (Indian) company would reach agreement amongst the shareholders for this to occur, but unfortunately agreement could not be reached with the majority shareholder."

The UK gambling company initially blamed IT issues for customer withdrawal requests not taking place but I believe there is a case for wrongful trading as the gambling company were offering bonuses of 100% of a customer deposit up to £500, paying out withdrawals when funds were received so there was a huge cash flow issue. 

On the basis the Indian PLC was the parent company with majority ownership, and the directors have a duty to prevent insolvent trading, should they have paid off the debts of the UK step down subsidiary rather than simply walking away from their obligations? 

As the company are a Indian PLC would you advise I contact them directly for a response as to why they did not pay off their creditors, go to a solicitor or is there an investigatory body in India that would look into this?
Asked 2 years ago in Business Law from United Kingdom
1. Well, gambling business is considered as illegal trade in India and if you are thinking of suing the Indian Company in India then it would be an unwise decision.
2. On the contrary you will have to explore your legal recourse against the UK based company only and I am sure there are number of remedial actions which can be initiated against it.
3. The most suitable law action suit which is advisable in india in similar circumstances can be explored in UK also and that is setting out ' winding up' proceeding against the defaulted compan.
4. A suit recovery suit is another option. Get in touch with a British attorney for the actions best suited to your case. .
Devajyoti Barman
Advocate, Kolkata
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1) since UK gambling company has collapsed chances of recovery of money due to you are bleak . 

2) if you feel that affairs of company have been mismanaged leading to its collapse your best option is to complain to UK  watchdog to carry out investigations in the affairs of the UK gambling company . 

3) if there is misappropriation of funds by the directors better course of action would be to file police complaint in Uk only . 

4) in india legal proceedings take years to be disposed of . 

5) you should lodge your claim with the official Liquidator in UK for recovery of your dues
Ajay Sethi
Advocate, Mumbai
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1. You can not insist the directors of the gambling company for the loss incurred by it,

2. If you feel that there was irregularities in the actions of the directors and/or misapprpriations, then you can lodge a complaint before the appropriate authority of U.K.,

3. Otherwise, there is no scope to successfully drag the Indian directors to Court to pay of the dues of the U.K. company to its criditors.
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
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1. The Indian legislature prohibits gambling in general. 

2. Any contract of gambling that you entered into with an Indian Company or with a British Company which is a subsidiary of an Indian company is incapable of being enforced in India under the Indian law. As such, you cannot file a lawsuit for recovery of money in India.

3. Your remedies, if any, are only under the British law in United Kingdom. 

4. If there is sufficient proof of misappropriation of funds by the company then you may file a complaint in UK. Such a complaint will not be maintainable in India.
Ashish Davessar
Advocate, Jaipur
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445 Consultations
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