Company Strike Off - Threatened legal action

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justintime

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Apr 12, 2009
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  • #1
    A company is looking to apply to strike off as the Company is insolvent, and has insufficient assets to appoint a liquidator. It has four main creditors plus HMRC. One of these creditors has got wind that the Company intends to strike off, and has sent an email saying they will issue county court proceedings within 14 days if the debt is not repaid by then. Various google seaches suggest the the Company can't stike off under these circumstances but I can't see anything in Companies Act section 1003 or surrounding sections that this is the case. For clarity all creditors would have been informed within 7 days of strike off as is required. Can this Company still apply for strike off or does it need to wait until a CCJ is issued for the outstanding debt owed to this creditor?
     
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    Lisa Thomas

    Lisa Thomas

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  • #4
    Yes the company can continue with its strike off action but the creditors can object. HMRC will automatically object and so will any bank with an outstanding Bounce back loan.

    More importantly, can I ask why is the company looking to be struck off, if it can afford Liquidation?

    I suspect perhaps the creditor is threatening to issue a winding up petition to liquidate the company in the court, rather than try to strike it off?

    This would achieve the end result the company should be looking for, although it would be better if the Directors are proactive at liquidating the company, instead, in accordance with their duty to mitigate the company's insolvency.

    Happy to give some advice - feel free to contact me.
     
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    justintime

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  • #5
    Lisa Thomas said:
    Yes the company can continue with its strike off action but the creditors can object. HMRC will automatically object and so will any bank with an outstanding Bounce back loan.

    More importantly, can I ask why is the company looking to be struck off, if it can afford Liquidation?

    I suspect perhaps the creditor is threatening to issue a winding up petition to liquidate the company in the court, rather than try to strike it off?

    This would achieve the end result the company should be looking for, although it would be better if the Directors are proactive at liquidating the company, instead, in accordance with their duty to mitigate the company's insolvency.

    Happy to give some advice - feel free to contact me.
    Click to expand...
    Hi Lisa, thanks for your reply. The Company can't afford to appoint a liquidator, as they have no assets other than about £500 worth of computer equipment. They contacted businessdebtline who advised them to apply for strike off. Since then they have engaged me to prepare final accounts, which I've just completed. The creditor has only said they intend to issue county court proceeds for the recovery of payment due, not issue a winding up order.
     
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    Lisa Thomas

    Lisa Thomas

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  • #7
    justintime said:
    Hi Lisa, thanks for your reply. The Company can't afford to appoint a liquidator, as they have no assets other than about £500 worth of computer equipment. They contacted businessdebtline who advised them to apply for strike off. Since then they have engaged me to prepare final accounts, which I've just completed. The creditor has only said they intend to issue county court proceeds for the recovery of payment due, not issue a winding up order.
    Click to expand...
    Thanks for clarifying - I misread your post and thought you said there were sufficient assets, not insufficient assets. Sorry about the mix up. Assuming the creditor has already been told the company is insolvent, and has been invited to liquidate/given notice of the intended dissolution etc, then so be it. Let the creditor carry on. It will be a waste of their time and money...

    Do the directors owe the company any money in relation to an overdrawn director loan account?
     
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    Elliot Green

    Elliot Green

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  • #8
    An application for strike off can be made. It is conceivable that when notice of it is provided to the creditor taking proceedings, they will object to it, which could likely stall the strike-off process.
     
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    Michael Loveridge

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    Aug 2, 2013
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  • #9
    The threat to issue County Court proceedings is almost certainly a bluff. The solicitors will probably have realised that the company is insolvent, and will have advised that court proceedings would just be throwing good money after bad.

    But even if they do sue it won't make any difference. You may as well just let a default judgment be entered, as it's a meaningless piece of paper.

    Is there any particular reason to strike the company off? Would it not be an option just to leave it for, say 6 months, and then apply on the basis that the creditor will by then have lost interest?
     
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    louis292

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  • #10
    Elliot Green said:
    An application for strike off can be made. It is conceivable that when notice of it is provided to the creditor taking proceedings, they will object to it, which could likely stall the strike-off process.
    Click to expand...
    True, banks and HMRC often object to a strike-off automatically. But if the company is completely empty, many creditors eventually stop objecting after a round or two because funding a compulsory liquidation costs them money they won't get back. It usually just turns into a waiting game.
     
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