Company dissolved but could director still get outstanding invoices paid as a sole trader from an old client ?

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TheStartUpGuy

Free Member
Mar 6, 2016
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  • #1
    Hello,

    Hope you're all doing well.

    My company was voluntary dissolved 10 months ago. However, an old client owes me some money and got in touch with me to settle the payment, but I trade as a sole trader now as oppose to running a Ltd company.

    I have asked the client to pay the invoice into my sole trader bank account but client is now refusing to pay up because
    The LTD company was voluntary dissolved and I no longer have the LTD company bank account.

    I have mentioned to them I'm now a sole trader and I don't work under my Ltd company anymore as its dissolved, But they are refusing to pay the fee they owe.

    They are stating the fact that because my Ltd company has now been dissolved my contract with them has ended. Also, because I'm a sole trader now they still won't pay me because they (the client) has no contractual agreement with me (the sole trader).

    This seems quite unfair and frustrating. The sum is just under 3k.

    Is that the end of my funds? The client will just keep the money?

    Any help and advise would be highly appreciated as this is quite stressful for me and my family.
     
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    Ian J

    Ian J

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    Nov 6, 2004
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    factoringsolutions.co.uk
  • #4
    TheStartUpGuy said:
    This seems quite unfair and frustrating. The sum is just under 3k.

    Is that the end of my funds? The client will just keep the money?

    Any help and advise would be highly appreciated as this is quite stressful for me and my family.
    Click to expand...

    It is no longer your money but actually now belongs to the Crown and should be paid to the Treasury Solicitor
     
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    DontAsk

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    Jan 7, 2015
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  • #6
    TheStartUpGuy said:
    Hello,

    Hope you're all doing well.

    My company was voluntary dissolved 10 months ago. However, an old client owes me some money
    Click to expand...
    No he doesn't.

    He might owe money to the creditors of the dissolved company, but I don't know how that works.

    TheStartUpGuy said:
    They are stating the fact that because my Ltd company has now been dissolved my contract with them has ended.
    Click to expand...
    Correct.

    TheStartUpGuy said:
    Also, because I'm a sole trader now they still won't pay me because they (the client) has no contractual agreement with me (the sole trader).
    Click to expand...
    Correct again.

    TheStartUpGuy said:
    This seems quite unfair and frustrating. The sum is just under 3k.
    Click to expand...
    Did the Ltd owe any money to creditors? It would be just as unfair to them if you received the money.

    TheStartUpGuy said:
    Is that the end of my funds?
    Click to expand...
    They are not your funds.

    TheStartUpGuy said:
    The client will just keep the money?
    Click to expand...
    Possibly, see above.
     
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    ChrisCallaghan

    ChrisCallaghan

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  • #9
    Hi @TheStartUpGuy

    I think the important thing to consider is why you chose to dissolve your Ltd. Was it just to simplify how you work? Or were there any unpaid liabilities?

    If there were no unpaid liabilities, then you could go through the process of attempting to reinstate your Ltd company.... but it is not a straightforward process. In addition to applying for Ltd company to be reinstated, you will also have to file accounts, open a new company bank account, and hope that this old client is still willing to pay. You will then have to consider how to withdraw these funds into your personal name. If as a salary, you will likely have to register for PAYE. If as a dividend, you will then have to declare it your self assessment.

    After all of this, you will then also need to go through the voluntary strike off process all over again.

    If this seems like a path you wish to go down, personally I'd suggest engaging an accountant to assist, but an accountant is not necessary.

    See the below link for guidance:

    www.gov.uk

    Restore your dissolved company

    Restore a company to the Company Register - administrative restoration, deadlines, fees and forms
    www.gov.uk www.gov.uk
     
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    Lisa Thomas

    Lisa Thomas

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    Apr 20, 2015
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  • #10
    The money belongs to Bona Vacantia.
     
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    Michael Loveridge

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    Aug 2, 2013
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  • #11
    As others have said, the debt is owed to the company, not you personally, so the customer is quite right in saying that you can't claim payment.

    It's too late now, but for the benefit of other readers who may face a similar situation what you should have done was to have the company assign the debt to you personally. You could then, having served notice of assignment on the debtor, pursued him personally.

    You could apply to restore the company to the register. Doing it through a professional would probably cost you around £1,000 - £1,500, so whether it's worth it for £3k is your call.
     
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    Gyumri

    Gyumri

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  • #14
    Michael Loveridge said:
    for the benefit of other readers who may face a similar situation what you should have done was to have the company assign the debt to you personally. You could then, having served notice of assignment on the debtor, pursued him personally.
    Click to expand...
    I believe you are right. It is still open to the OP to resurrect the company and if possible obtain a waiver from the Treasury to release the right to the debt back to the company, which can then be assigned if needed.

    It's a long-winded process and might leave Companies House with a black eye if it can't recover the penalty for non-filing of accounts, because the only asset of the company has been assigned to its director!

    A liquidator would normally have something to say about the assignment but I don't think companies house bothers to wind up companies.
     
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    Ian J

    Ian J

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    Nov 6, 2004
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    factoringsolutions.co.uk
  • #15
    Michael Loveridge said:
    for the benefit of other readers who may face a similar situation what you should have done was to have the company assign the debt to you personally. You could then, having served notice of assignment on the debtor, pursued him personally.
    Click to expand...

    If you are going to assign a debt from an insolvent company to yourself you would need to give full value back to the company otherwise it would be a fraudulent preference
     
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    The Resolver

    The Resolver

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    • Mar 31, 2006
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  • #16
    What we haven't been told is whether the company was solvent when dissolved (a Members Voluntary Liquidation) or whether any creditors have been left unpaid.
     
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    ChrisCallaghan

    ChrisCallaghan

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  • #17
    The Resolver said:
    What we haven't been told is whether the company was solvent when dissolved (a Members Voluntary Liquidation) or whether any creditors have been left unpaid.
    Click to expand...
    I've asked the OP but they haven't commented.

    I doubt the OP closed via a Members Voluntary Liquidation, as the liquidator would've distributed the debtor to the shareholders as part of the liquidation. The company could still have been solvent and dissolved without the need of an MVL. An MVL is usually only beneficial from a tax efficiency perspective where there's £25k + in assets (often just funds) left in the company.

    If the OP returns to this thread, maybe they could provide some more details.
     
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