1 man band PSC in liquidation for 7 years...

[james1248]

I’ve got a situation with a CVL (simple PSC, one-man band). The liquidators started with about six figures available, but instead of wrapping things up, they’ve been chipping away at the pot each year with “legal fees” linked to applications to hike their own remuneration.

The fees originally approved were around £20k. Since then, they’ve steadily claimed more “work,” and are now pushing for nearly three times that figure — if the court signs it off again.

There are no creditors left (all claims have been rejected/withdrawn). So, as I understand it, short of some final winding-up costs, the balance should eventually come back to me as shareholder.

Problem is, they seem to be stringing this out to drain the estate with fees.

Has anyone dealt with this before? Is it right that, with no creditors, the surplus ought to be distributed back to me — and if so, how do you stop the IPs from dragging it on forever?

I only realised today after looking on companies house, I thought it was all done and dusted...

 

[Elliot Green]

I’ve got a situation with a CVL (simple PSC, one-man band). The liquidators started with about six figures available, but instead of wrapping things up, they’ve been chipping away at the pot each year with “legal fees” linked to applications to hike their own remuneration.

The fees originally approved were around £20k. Since then, they’ve steadily claimed more “work,” and are now pushing for nearly three times that figure — if the court signs it off again.

There are no creditors left (all claims have been rejected/withdrawn). So, as I understand it, short of some final winding-up costs, the balance should eventually come back to me as shareholder.

Problem is, they seem to be stringing this out to drain the estate with fees.

Has anyone dealt with this before? Is it right that, with no creditors, the surplus ought to be distributed back to me — and if so, how do you stop the IPs from dragging it on forever?

I only realised today after looking on companies house, I thought it was all done and dusted...

Seems perhaps a touch odd. I wonder if there might some outstanding matter referred to in the last progress report and there's a bit more to it. How is it known all claims withdrawn or rejected?

 

[james1248]

Thanks Elliot — fair point.

The 2025 LIQ03 actually states:

• “There are no known secured creditors.”
• “There are no known preferential claims.”
• “No secondary preferential creditors (HMRC status doesn’t apply as case predates 2020 change).”

It also confirms “no assets remain to be realised.”

Receipts & Payments show around half of the original amount is still in the bank with HMRC no longer listed at all. The only activity seems to be fee-related (including a court application to increase remuneration).

So unless I’m missing something technical, there are no creditors left and a surplus sitting there. Would you agree the next step is to press the IPs for confirmation of the creditor position, a copy of the estate bank account, and a closure/distribution timetable?

 

[Elliot Green]

Thanks Elliot — fair point.

The 2025 LIQ03 actually states:

• “There are no known secured creditors.”
• “There are no known preferential claims.”
• “No secondary preferential creditors (HMRC status doesn’t apply as case predates 2020 change).”

It also confirms “no assets remain to be realised.”

Receipts & Payments show around half of the original amount is still in the bank with HMRC no longer listed at all. The only activity seems to be fee-related (including a court application to increase remuneration).

So unless I’m missing something technical, there are no creditors left and a surplus sitting there. Would you agree the next step is to press the IPs for confirmation of the creditor position, a copy of the estate bank account, and a closure/distribution timetable?

What about the unsecured creditors?

 

[james1248]

I'm not sure - I've emailed them to ask.

In the receipts/payments schedule HMRC still show as a line item (c.£1xxk under Inland Revenue), but in the latest report the “unsecured creditors” section of the statement of affairs has basically vanished. Instead, the narrative now just says “there will be insufficient funds to pay a dividend to unsecured creditors.”

So it looks like they’ve stopped presenting HMRC as an active claim, while at the same time treating the whole £5xk left in the bank as potentially swallowed by their fees.

Guess I'll sit tight and await their reply.

 

[Elliot Green]

I'm not sure - I've emailed them to ask.

In the receipts/payments schedule HMRC still show as a line item (c.£1xxk under Inland Revenue), but in the latest report the “unsecured creditors” section of the statement of affairs has basically vanished. Instead, the narrative now just says “there will be insufficient funds to pay a dividend to unsecured creditors.”

So it looks like they’ve stopped presenting HMRC as an active claim, while at the same time treating the whole £5xk left in the bank as potentially swallowed by their fees.

Guess I'll sit tight and await their reply.

Not having funds to pay unsecured creditors is not the same as there not being any unsecured creditors.

 

[Bobbo]

Whilst it's very much not my area, the original approved amount of £20k seems a lot for a CVL of a "simple PSC, one man band" as you describe it.

You seem to have gone into this expecting a significant amount to be distributed to you, however you say the latest liquidation accounts state insufficient funds to pay a dividend to unsecured creditors which is quite the opposite.

Hard to really comment further without having sight of the liquidation accounts.

 

[james1248]

Quite the opposite - I'd forgotten all about it and randomly took a look to see if it had all been completed.

Seems Elliot was correct - they are still there as an unsecured creditor, just the way it was worded threw me off and for a moment I thought there were no creditors. So, a shame that 6 figs is to be eaten up by liquidators and HMRC will get nothing...

Due to illness, CVL + IVA at the same time. Sold my house to clear the IVA and repay over half of the directors loan. Should have been an easy job for them.

 

[Lisa Thomas]

Quite the opposite - I'd forgotten all about it and randomly took a look to see if it had all been completed.

Seems Elliot was correct - they are still there as an unsecured creditor, just the way it was worded threw me off and for a moment I thought there were no creditors. So, a shame that 6 figs is to be eaten up by liquidators and HMRC will get nothing...

Due to illness, CVL + IVA at the same time. Sold my house to clear the IVA and repay over half of the directors loan. Should have been an easy job for them.

Hasn't HMRC been paid as the secondary preferential creditor?

 

[Lisa Thomas]

The creditors (or the court) have to approve the liquidator's costs prior to drawing, otherwise they can only charge at the Official Receiver's scale rates.

If you think they have not conducted themselves correctly in respect of their fees, you can make a complaint, which you can then escalate here, if you are unsatisfied with the outcome:

Complain about an insolvency practitioner

How to complain about an insolvency practitioner - complain about unprofessional or unethical conduct or how your case has been handled.

www.gov.uk

 

[Bobbo]

Hasn't HMRC been paid as the secondary preferential creditor?

See OP's comment #3

 

[james1248]

Hasn't HMRC been paid as the secondary preferential creditor?

Secured creditors
There are no known secured creditors.

Preferential creditors
There are no known preferential claims.

Secondary preferential creditors
Please note that our last annual progress report advised creditors that there were secondary preferential creditors. Iwould advise you that as this case predates HMRC's secondary preferential status, which came into force on December2020, in this case, it does not apply. Therefore, there are no secondary preferential creditors.

This is what caused me confusion yesterday. There was no mention of unsecured creditors, whereas there had been before (HMRC). Also in the statement of affairs, there were previously sections named "Cost of realisations" and "Unsecured Creditors"; now simply "Payments", with Inland Revenue listed there with a negative amount.

They currently estimate 57k of fees in total. No point in complaining, it's HMRC who are losing out really. However, 7 years is taking the mick a bit.

 

[Lisa Thomas]

Secured creditors
There are no known secured creditors.

Preferential creditors
There are no known preferential claims.

Secondary preferential creditors
Please note that our last annual progress report advised creditors that there were secondary preferential creditors. Iwould advise you that as this case predates HMRC's secondary preferential status, which came into force on December2020, in this case, it does not apply. Therefore, there are no secondary preferential creditors.

This is what caused me confusion yesterday. There was no mention of unsecured creditors, whereas there had been before (HMRC). Also in the statement of affairs, there were previously sections named "Cost of realisations" and "Unsecured Creditors"; now simply "Payments", with Inland Revenue listed there with a negative amount.

They currently estimate 57k of fees in total. No point in complaining, it's HMRC who are losing out really. However, 7 years is taking the mick a bit.

Ha - easy mistake to make, HMRC have had preferential status for a while now so easy to forget they were unsecured for a long time too, and like you say this is an old case. 7 years is a long time...! Hopefully they can justify that. I've had longer...

 

[james1248]

Hmmm. I asked them whether HMRC’s claim remains admitted, or whether it has been withdrawn or disallowed - the reports just aren't very clear.

They have replied and told me that no creditor claim has been admitted to rank for dividend in the liquidation and it is not the intention of the liquidators to agree the claims of the creditors as there is no prospect of a dividend for any class of creditor.

I'm confused now - still over 50k in the bank and they've drawn 32k already (approved by the court).

Last year they estimated 45k total in fees, this year it's 57k.

 

[Elliot Green]

A creditor's claim is rarely withdrawn, including one from His Majesty's Revenue.

In the case of NOAL SCSP & Ors v Novalpina Capital LLP & Ors [2025] EWHC 1392 (Ch), the judge noted:
"IR 14.7 (1) states that an office holder may admit or reject a proof of debt for dividend purposes. In cases where there is no prospect of a dividend, it is generally difficult to justify or consider that an office holder would seek to adjudicate upon proofs of debt."

A liquidator isn't about to indulge in adjudicating creditor claims when the arithmetic makes a distribution impossible. That is no more than a species of commercial prudence.

Now, as to the figures floated, is the £50,000 before or after the £32,000 already received? If the cash at bank balance is £18,000, then set against a fee estimate of £57,000, the outcome appears clear. Perhaps a perusal of the Receipts and Payments enclosure in the Progress Report might unscramble the uncertainty.

 

[james1248]

Well...

The actual agreed fee limit to start, set by HMRC, was 25k. I was trying to keep things slightly anon but never mind!

Creditors: HMRC only.
Total receipts: 88k (from house sale via IVA).
Office holder fees drawn to date: £32k
Other costs: 4k
Cash remaining in bank now: 52k

Here's what they said today:

"The balance on the account, which is held by the liquidators, is the sum of £50,000. We do not anticipate any further recoveries.

The reason why the liquidators have said that there will be no dividend to the general body of the company's creditors is that the costs and expenses that have been and will be incurred in the liquidation will exceed the cash balance held.

This means that there will be no dividend to creditors and hence, nothing for shareholders.

In the circumstances, it would not be our normal practice to share an application to the Court of this nature with you, as you have no interest in the outcome.

I can confirm that no creditor claim has been admitted to rank for dividend in the liquidation and it is not the intention of the liquidators to agree the claims of the creditors as there is no prospect of a dividend for any class of creditor. Creditors are entitled to submit claims to the liquidator, however this is now academic since the liquidators do not intend agreeing the claims as they will not be paying a dividend to any class of creditor.

Creditors had initially approved the liquidators’ fees up to £25,000 (the limit that the liquidators can draw). With increasing time costs, the liquidators had requested approval for an increase in the fee level, however no creditor responded. As a consequence, the liquidators sought Court approval of their increased fee request which was granted albeit with a court order that was ambiguous. The request to the Court was for an increase of £32,000 to £57,000, but could be read as an increase of £32,000 or an increase to £32,000. On advice, we have therefore decided to take the order as an increase to £32,000 and now need to make an application to court for a further increase, which will take some time given how busy the courts are.

With regards to your question as to how long it will take to closure, we would like to close this as soon as possible. All that is required to close is to finalise the liquidation, pay outstanding costs and any tax due for the liquidation period. In order to do this we require a Court order for our fee increase and unfortunately this will take some time and I am not able to give you any idea as to how long. The quickest way would be to send a request to the creditors so that they approve our fee request, however they have not responded on the last two requests which is why we resorted to a court application. If you are aware of a creditor that would respond to a fee request that would mean that we would not have to go to court and could probably close the liquidation in the next few months. If not then we will need to make a court application which in itself could take several months on top of the above estimate."

In actual fact, their report last year said that they were applying to the court to increase their fee limit by 7k, to 32k.

Basically, by mid 2020 they had all they needed. Seems now, it's all about trying to get approval to increase fees via the court, which I guess will just be repeated until the pot is empty.

This year there was 7k of fees and a lot of the work was around dividends, that they aren't paying...

 

[BlueDress1]

Just to let you know I had a situation back in 2007 - it was a bit more complicated than yours but still not that complicated - HMRC due a relatively small amount, ( under 15k ) 3 suppliers due around £17k in total and an investor who stood to lose £88k - ( used EIS I believe)

We were also owed back in £39k from a very slow paying debtor ( but in Germany - company still going as of today) this debtor was kind of a competitor in some ways and on reflection we believe they slow paid to get us out the scene and knew our cash flow was tight - . And around £7000 from a few other debtors. All in all we were quoted ‘around’ £12k at the beginning for a CVL - I was devastated at time as company was doing quite well and had a good name . Investor got cold feet when it looked like we would be stuffed with a £39k debt and it was he who said we had to liquidate .

Strangely they managed eventually to get roughly £40k back in and costs mysteriously went up to oooh about £40k - On perusal of their costs it appeared they were charging out junior admin at £125 an hour etc and lots of hours - when there simply wasn’t that much work needed at that stage - all the basics were done and scrutinised within 6 months and they sent a statement over that was around £12k — but it was after that point they recovered the debtor money and then dragged it on for 2 years more taking more and more cash out available funds .sadly it’s why I take a dim view of some of the IP practices , ( and these were not small) as it seems to me there is potential for some sharp practice if their is money to play with

 

[james1248]

Indeed.... 169.5 hours total here, at their average rate of £286.70 per hour, that works out to the £47,662 in time costs they've billed to date.