Voluntary Liquidation advice for retailer

Dear Clare

Online crime and cyber fraud can debilitate any business and it seems you have suffered here.

Firstly to liquidate a company, you will need to appoint a Licenced insolvency practitioner (IP). Think of him as a funeral director. He is Licenced and qualified to handle the burial of your company.

The process is as follows:
1. Call a members meeting to resolve to wind up and appoint a liquidator. Called on 14 days notice.
2. Call a creditors meeting to present the company's statement of affairs, appoint liquidator, form a liquidation committee (if required) and decide on liquidator's fees. Called on 7days notice.

Members meeting is held with directors and usually chaired by the IP.

Creditor meeting is held with directors, creditors and usually chaired by the IP present to field questions regarding the demise of the company. Meetings are held with proximity to creditors but rarely do they actually attend.

Once the motions are passed at the creditors meeting, the liquidator is appointed and the company enters liquidation.

The Liquidator then has a duty to investigate the company's affairs and provide creditors with a report on the director's conduct.

The kind of things to be looked at further will be:

1. Any assets or property of the company gifted or undersold in last 2 years
2. Any creditors paid whilst the company was insolvent (preference). be careful of payments made to reduce overdrafts with personal guarantees.
3. Any charges granted on property in last 2 years
4. Wrongful trading - directors aware of insolvency and took no steps to reduce losses
5. Misfeasance - misapplying, retaining or becoming accountable for monies or property of the company
6. Reuse of company name - applies to directors who run a company into liquidation and set up a new company under a similar trading name
7. Director disqualification - disqualification under CDDA 1986 if you are found unfit as a director in the future

What you need to do:
1. Make a list of all debts owed, with name, addresses and balances
2. Take an inventory of stock
3. Do not empty your bank account
4. Make a list of any assets
5. Speak to a Licenced IP

Company Debts:
30k to suppliers
2/3k to HMRC
2k to other creditors

Personal liability:
7k left on a business loan
4k on a credit card
1 year lease remaining on our unit (10k)

These will all be pursued by the creditors even after the liquidation. I.e You may need to make arrangements to pay or this may result in defaults and CCJ's registered against you. Check the lease for breakout clause.

Wages are preferential debt and are paid first out of realisations.

The stock you hold it seems has a liens/retention of title over it. This means your supplier effectively owns the stock until full payment is made. The contract will be reviewed by the liquidator before any decision is made on this. if the supplier removes the goods prior to liquidation, the IP can go to court and seek reparations, in the event the liens is invalid.

Depending on who you speak to, fees vary from £3500 to £5000 plus VAT. Fees are generally charged on complexity.

If you need further help or want to speak to an IP informally, I can arrange for you.

Hope this helps

Justice Goddard Insolvency & Bankruptcy
Arif Patala BSc (HONS)
Tel 0844 822 0845
Mobile 07708 500816

Don't pay any fees to a liquidator out of your own pocket if your company has no funds. Do search for posts by a member called Spongebob, he's posted plenty of advice/guidance about this type of situation.

JG Bankruptcy's advice is technically correct if you choose to follow the letter of the law. Unfortunately it will also cost you an awful lot of money. I give my advice based not on the letter of the law, but on what is in your best interests and what you can get away with.

cj1982 said:

Our current situation:

The business owes:
30k to suppliers
2/3k to HMRC
2k to other creditors

Personally we are guarantors of:
7k left on a business loan
4k on a credit card
1 year lease remaining on our unit (10k)

Plus we have wages that we need to pay to staff of 5k

We have in excess of 50k of stock at full retail price for this season held at the store whilst we continue to trade.
The stock is signed with T&Cs that says that the stock is ownership of the brand until the full payment is made.

Click to expand...

Let's list your problems in order of importance;

1. Lease on unit.
2. £7k debt to bank
3. £4k debt on credit card.
4. £5k owed to emplyees.





10. £30k to suppliers
11. £2/3k to HMRC
12. £2k to other creditors


The obvious immediate first step would be to turn as much stock into cash as you possibly can over the next week or so. We have a bank holiday weekend coming up - hold a 4-day Closing Down Sale and get rid of everything at whatever price you can get for it. Man the shop yourselves - if your staff get wind of what's going on they will simply bleed your cash dry.

The first thing your suppliers or your landlord will know about it will be on the Tuesday after Easter at the earliest, by which time you should have taken enough cash to clear the bank loan and credit cards.

The Ramalpa (retention of title) clause in your suppliers' T&Cs is in practice meaningless if the stock has been sold and there will be no comeback.

Any remaining stock should be cleared out of the unit on the Monday night and taken to a place of safe keeping. Ebay under an alias would then be a good way of selling it - auctioned garment by garment with no reserve. Keep a record of all transactions.

Give formal notice to your landlord.

Then write to all your creditors using this template;



Personally, I would use any surplus money to pay my employees. They are the most deserving and least able to absorb a loss. The only other creditor you need give a second thought to is your landlord; you will have to keep up the payments on the rent as you have guaranteed them.

Most importantly, get on with your lives and find a new income source.

I'll post more later but the school run beckons...