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Hello I am after some advice. I run a Ltd co that is getting into difficulties.
It is looking like it is going to have to be placed into liquidation. We do not have the funds to approach an Insolvency Practitioner. It needs to be wound up due to debts owing. This will also result in my personal bankruptcy due to personal guarantees etc.
How or who, shall I approach to get the ball rolling
Any help appreciated
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Gary Pettit
5th July 2010, 15:32
Reference SM68
Good afternoon,
I note that you need to place a company into liquidation but do not believe there are sufficient funds with which to take this action. This is not an untypical scenario but an insolvency practitioner can normally do a "Burial liquidation" for around £6K (being £5K fees and £1K disbursements).
Alternatively, for around £2.5 - 3K you may approach a solicitor and instruct them to petition the court for winding up. A majority of this cost is court fees etc but, if the company really has little/no assets then that is a possibility.
Outside of that a director could send (what I call) an "ABC letter". This is a standard letter to all creditors. It explains the company is insolvent and has ceased to trade. However, there are insufficient assets avalaible to wind up the company. Accordingly, if any creditor owed £750 (or more) wishes to present a winding up petition then the company shall not defend it.
If no creditor is agreeable to presenting a petition then, after a period of (say) 3 months you may apply to the registrar of companies to have the company struck off. The application would be by way of letter with a copy of the ABC letter attached.
Hope that helps.
David Griffiths
5th July 2010, 16:13
If no creditor is agreeable to presenting a petition then, after a period of (say) 3 months you may apply to the registrar of companies to have the company struck off. The application would be by way of letter with a copy of the ABC letter attached.
Hope that helps.
The process to get the company struck off is by filing form DS01, not by letter. You have to send a copy of the form to all known creditors. There is a fee of £10
The alternative is to sit tight and do nothing. Eventually the registrar is likely to take action to strike the company off for not filing accounts and returns.
Gary Pettit
5th July 2010, 16:30
Thank you for details of the form, David. As I do not get involved in that side I was unaware of a prescribed form.
The only problem with sitting back and doing nothing is the company remains "Live" and so has the potential of incurring further credit (including on-going utilities, rates etc) while it relies upon the Registrar to go through their striking off procedure.
There may also be other issues that could expose a director (in terms of offences covered by the Company Directors Disqualification Act) which need to be taken into consideration.
The ABC letter route at least informs creditors of the position and provides the director with a degree of protection as it may be seen as the action of a reasonable dilligent man; something the authorities look at when considering culpability.
PaulCCS
19th July 2010, 08:38
Do you have any assets in your personal estate?
Trilium
19th July 2010, 11:02
Reference SM68
Outside of that a director could send (what I call) an "ABC letter". This is a standard letter to all creditors. It explains the company is insolvent and has ceased to trade. However, there are insufficient assets avalaible to wind up the company. Accordingly, if any creditor owed £750 (or more) wishes to present a winding up petition then the company shall not defend it.
What happens if a creditor wishes to present a winding up petition? What are the next events that happen in that case?
PERCY67
19th July 2010, 17:37
Firstly DO NOT be wasting money you do not have.
Any assets you may wish to keep get out of the business. Then issue the following to all your creditors.
I am writing to inform you that xxxxxxxxx is technically insolvent and hence has ceased trading as of xxxxxx
The company has insufficient funds or assets to formally go in to liquidation and hence invites creditors or members to issue winding up proceedings should you wish to do so.
If it is not subject to any formal winding up proceedings; the intention is to apply for Strike Off under s652 of the Companies Act after a period of three months from the above date.
Spongebob
19th July 2010, 21:52
Some good advice here.
The only creditor likely to initiate winding up proceedings against the company is HMRC. For anyone else it would be a transparent case of throwing good money after bad.
Follow Percy's advice above and write to all creditors. Then wait while you get on with the rest of your life. You have fulfilled all your responsibilities as a director simply by ceasing to trade. All assets and stock of the company should be moved to a place of safe keeping known only to yourself. Otherwise you risk having them seized by bailiffs acting on behalf of one creditor - this would clearly be unfair to other creditors ;)
Hopefully a winding up order will arrive from HMRC fairly soon.
If you are going to have to go personally bankrupt my advice would be to do it now - before the company gets wound up. There is nothing to gained in delaying. Remember though, that you have to resign formally as a director as soon as you go bankrupt.
PaulCCS
20th July 2010, 07:51
I have to disagree with some of Percy67's comments. Whilst this is one option, taking assets out of a business is of course illegal.
Also, this route doesn't dissolve a director of their responsibilities if they are aware the company is insolvent, which you clearly are.
David Griffiths
20th July 2010, 08:12
Also, this route doesn't dissolve a director of their responsibilities if they are aware the company is insolvent, which you clearly are.
Bet it would be a good solution though! ;)
for further liquidation help (http://www.crowndebt.co.uk)