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We helped insolvency practitioners in a £1.22 million office holder claim against a cosmetics distributor.

The bankrupt purportedly entered into a referral fee agreement with the distributor, whereby it would receive commission for introducing end clients.

The alleged agreement was that it would collect monies from the end clients and forward them on to the cosmetics distributor, who would then send the goods to the end client. However, an analysis of the bankrupt’s bank statements showed it was collecting monies from investors, supposedly for forex trading, which it then paid directly to the cosmetics distributor.

The bankrupt paid £1.22 million and, in return, received a c. £32,000 commission. The office holders claim this is a classic transaction at an undervalue. However, the cosmetic distributor claims this was a legitimate referral agreement and it did not know the monies were not coming from the end clients. This went to trial in December 2019 and judgment was awarded for the cosmetics distributor.