The assets of Fireworks UK Limited are being sold to Fireworks International Limited and the Managing Director of Fireworks UK Limited has been working very hard for the last 6 months to get the sale through.
The target date for completion was set as 31 October 2012 and as a result of a lot of hard work the target date was achieved and the Managing Director has gone out with some friends to a “Fright Night” party at a haunted house to celebrate. Unfortunately, he was given such a fright at the party that he dies.
The Managing Director was a very organised chap and he had kept his contract in a file together with the details of his benefits which included life assurance of 4 x his salary which was £150,000.
The Managing Director’s estate wrote to Fireworks International Limited drawing to their attention the death and demanding payment of the sum due under the life assurance policy. However, Fireworks International Limited had not put in a place a policy to cover the Managing Director so were faced with having to meet this claim out of their own funds.
The morale of this story is that when buying a business the purchaser should do there due diligence and make sure they put in place the benefits such as life assurance to apply immediately on completion.