Cost effective insolvency

[endofroad]

I have a business that has been very quite in the last few months and I want to dissolve the company.

What is the cheapest way to go about this?

It has less than £10k in liabilities (bounce bank load outstanding, plus credit card) and less than £1k in assets (of which only a few hundred is cash).

I have no personal guarantees on it so can walk away. In current circumstances I cannot afford much personally either (although I am concerned about the impact on my personal credit as I have never personally defaulted on anything, but my finances are not in great shape with my income much reduced). On the other hand there is not enough money left in the company to pay any professionals so I might have to dig some money out?

Should I try talking to the creditors to negotiate something? Start a formal process? I am guessing the worst thing to do would be to ignore the problem?

 

[Elliot Green]

Ignoring the issue is never a great idea.

Absent personal guarantees and misconduct, then personal credit rating should be unaffected by dissolution or liquidation of the company. It does not stop public records of the company from recording your linkage to it for anyone searching Companies House.

Potentially the cheapest way is voluntary strike off using the DS01 form at Companies House with an online fee of £33. However, as you have a bounce back loan, this is likely to lead to an objection to the strike off routine by the lender or government department, with the company not struck off whilst they await for you to do something such as put it into liquidation. This process can drift on for some time.

If you are looking to wind up the company and not have to deal with it going forward, so that you do not have obligations such as the filing of accounts, corporation tax returns and confirmation statements to process and pay for each year and or any associated accountancy fees arising from the same, then Creditors Voluntary Liquidation ("CVL") might (subject to some further exploration of the facts of your case), be an appropriate option to consider. It might overall be a cost-effective route. You can contact me using my details below for an initial free consultation on the matter.

There are other Insolvency Practitioners on this forum, as well as Oliver Elliot, who I am sure will likely offer something similar for you to consider to obtain some assistance and advice on insolvency and liquidation options.

 

[Lisa Thomas]

Your options are to top up the assets personally to pay for liquidation (which you are not obliged to do), or look to dissolve.

You can pay someone to help you dissolve, or do it yourself.

I'm presuming you have no employees.

I'd be happy to talk through these options with you in more detail - there is no charge to chat with me.

 

[Paul Kelly ICHYB]

The Spongebob Plan?

 

[pentel]

Be aware that being a director of a company that has suffered an insolvent liquidation could affect the cost of insurance in the future

 

[Gavin Bates]

Hi

I think Oliver and Lisa have summarised the options available so nothing further to add other than to back up the advice already given.

Best Wishes

Gavin

 

[endofroad]

Thank you for answers. I have spoken to the credit card provider and they say they cannot do anything more until I actually miss a payment.

 

[endofroad]

The Spongebob Plan?

I was wondering about that. I thought they had cracked down on it? Is there an up to date guide on that? From what I have managed to read up on it I at the very least have to inform creditors first.?

 

[UK Contractor Accountant]

I was wondering about that. I thought they had cracked down on it?

they have - it doesnt exist anymore

Follow the Dissolution Process mentioned above - unlikely to happen though when you have a BBL in existence until the Government release the directive to Companies House not to allow Strike off where there is a BBL in place.

Also need to consider whether the liabilities of the business are matched by an overdrawn Directors Loan Account.

 

[Lisa Thomas]

I had already mentioned the dissolution procedure might be appropriate for you and offered to chat to you about it.

 

[endofroad]

I had already mentioned the dissolution procedure might be appropriate for you and offered to chat to you about it.

I am going to get in touch. Thank you,.

 

[Paul Kelly ICHYB]

it doesnt exist anymore

Wow - there endeth a UKBF institution!

 

[Lisa Thomas]

'Spongebob plan' was just a nickname on this forum for the dissolution procedure, which does still exist...

 

[Paul Kelly ICHYB]

which does still exist...

Oh. I am really confused, now!

 

[UK Contractor Accountant]

Oh. I am really confused, now!

The SB plan involved hiding away and swiping assets (bank balances, vehicles etc) and failing to declare overdrawn Director Loan accounts on dissolution as income of the Director. That part of the so called plan no longer exists.

 

[Lisa Thomas]

The SB plan involved hiding away and swiping assets (bank balances) and failing to declare overdrawn Director Loan accounts on dissolution as income of the Director. That part of the so called plan no longer exists.

I don't think that was ever part of the official procedure, it was just the advice given by the user, 'spongebob'.

 

[UK Contractor Accountant]

I don't think that was ever part of the official procedure, it was just the advice given by the user, 'spongebob'.

Don't think most of it was to be regarded as 'official procedure'!

Strike off your limited company from the Companies Register

How to close down your limited company by getting it struck off the Companies Register

www.gov.uk

 

[UK Contractor Accountant]

Potentially the cheapest way is voluntary strike off using the DS01 form at Companies House with an online fee of £33

£44 by cheque or £33 online

 

[endofroad]

Thank you everyone for all the advice.

I had a very useful chat with @Lisa Thomas and thank you. its really nice for a free chat to be useful rather than a pitch! Thank you, Lisa.

It is clear voluntary strike off is the way to go.

One thing I am uncertain about is whether the date the company ceased trading is the last day on which it did work or the date on which the invoice for that work was sent. There was a gap of a few weeks between the two so it makes a difference to the date on which i can apply for dissolution.

The process itself seems simple (although its a bit scary doing it) - basically fill in the form, and send copies to creditors etc. within seven days. Is that all I need do?