Buyer of my company wants his money back - urgent help needed

[david6]

Hi all,
This is my first post on this site. I really really need urgent help. I sold my company to another a year and a half ago. They have now written me a letter stating that they are going to sue me because they have found various descrepancies in the accounts. Basically the true profit was 10k not 17.5k.
When I sold them the company I had only been trading for a year. I provided them with a set of annual accounts that my accountant had prepared for me. The accountant and I did not know at that point that I was going to sell the business. They did not check these accounts against any of my computer records. I trusted that my accountant had prepared the accounts correctly as I had no reason to suspect otherwise.
The accounts were for the period ending in October 2005 and I was bought out in March 2006. The company that bought my company did not look at the accounts for the period between October and March. The company that bought mine tried to sue my accountant but were advised that this was not a very good idea as he had stated in his terms and conditions that I signed that there was no guarantee that the accounts would be accurate.
When I signed the paperwork for the sale of the business there was a warranty in it stating that I agreed that the accounts that the accountant had provided were correct. I obviously thought that they were or I wouldn't have signed it. Does the company have any case against me and would I have a case against the accountant? The insurer for the accountant rejected the claim against his client stating that the company that bought me out had not used any due dillegence as they hadn't looked at the accounts between the period October-March and hadn't studied my computer records to see if the accounts that the accountant had prepared were correct. It was only a very small business in its second year of trading. Please please help as I am extremely stressed at the moment and I can't get to see a solicitor until Monday as they are closed at the weekend!
Thanks.

[Ian J]

I'm afraid that you are unlikely to receive a detailed answer here - especially before Monday as the matter is too specialised. Nothing is likely to happen in a hurry anyway

[LimeLegal]

You would not get advice in any event without someone seeing the actual agreement for sale. In most cases there are clauses advising those buying to confirm accounts information by their own advisors as part of their own due diligence. If you were using a professional accountant it would be usual for them to check the figures against actual trading documents, bank statements, cheque books, invoices etc.

If you want advice then by all means contact us via email with a scanned or faxed copy of your agreement. We can then advise you on the routes available to you and the strength of that agreement.

[brolene]

They would have to spend some considerable ammount of money on solicitors in order to prove that you were to blame and that they were not negligent.
Their costs would come to many 10's of thousands and the company would not be worth that probably.Tell them to get lost.

[MikeH]

Brolene has a point. It will not be cheap for them to proceed with legal action against you. The difference in profit is not big.