A couple of insolvency questions

Discussion in 'Insolvency' started by sueg12, Dec 12, 2019.

  1. sueg12

    sueg12 UKBF Newcomer Free Member

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    Hi everyone

    Unfortunately, despite my best efforts, it looks as though my small boutique business will have to be wound up. Because of the nature of the business, I order stock a season in advance and I was hoping somebody could let me know what the position would be with orders that have been placed and will be due to start arriving mid-Jan for the new season. The business has 30/60 days terms with suppliers and no outstanding debt to any of them.

    My second query is would it be possible for the shop to remain open during the liquidation process to sell off the remaining stock, i.e. could the liquidator use the shop for that purpose?

    Thanks all, in advance!
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

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    Be a good idea to cancel the orders.
     
    Posted: Dec 12, 2019 By: Mr D Member since: Feb 12, 2017
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  3. kulture

    kulture UKBF Legend Staff Member

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    Are you a sole trader or a limited company. The best way forward very much depends on the answer to this question.
     
    Posted: Dec 12, 2019 By: kulture Member since: Aug 11, 2007
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  4. sueg12

    sueg12 UKBF Newcomer Free Member

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    It's a limited company
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #4
  5. kulture

    kulture UKBF Legend Staff Member

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    OK, so when you say no outstanding debt, do you actually mean all suppliers paid off in full, or debt not due YET? Also what other liabilities and debts are outstanding? and other than stock, what assets does the company have? (realisable assets, not stuff that is bolted to the wall and would sell at practicaly nothing)
     
    Posted: Dec 12, 2019 By: kulture Member since: Aug 11, 2007
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  6. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Q1 Cancel the orders.
    Q2 No the company will not trade in Lqn but you should use agents to sell the stock and this could be done from the premises as either a firessale or the agents will sell.

    You should really take proper advice from an IP.
     
    Posted: Dec 12, 2019 By: Lisa Thomas Member since: Apr 20, 2015
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  7. sueg12

    sueg12 UKBF Newcomer Free Member

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    Yes, all outstanding payments have been made to suppliers and nothing due to HMRC. £2k company credit card to pay. There is around £25k (trade price and ex-VAT) of stock and 12 months left on the Lease (£12k pa).
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
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  8. sueg12

    sueg12 UKBF Newcomer Free Member

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    Thank you Lisa.
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    That stock may well sell for a lot less.
    Have seen 10p in the pound for wholesale value paid.
     
    Posted: Dec 12, 2019 By: Mr D Member since: Feb 12, 2017
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  10. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    You also need to take care not to sell it at an undervalue or this could come back to bite you personally - hence best to speak to an IP and use professional agents to value/sell the assets.
     
    Posted: Dec 12, 2019 By: Lisa Thomas Member since: Apr 20, 2015
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  11. sueg12

    sueg12 UKBF Newcomer Free Member

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    Thank you, that's exactly what I'm concerned about!
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #11
  12. sueg12

    sueg12 UKBF Newcomer Free Member

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    Okay, thank you Lisa. What kind of professional agents would I be looking to for a valuation?
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #12
  13. Mr D

    Mr D UKBF Legend Free Member

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    Whoever buys it, probably as a job lot, will likely sell it on in smaller quantities to retailers.
    The stock you hold will include stuff you had trouble shifting. So any retailer will be looking to buy it cheaper than wholesale.

    To be honest probably the best option when you think you are going to become insolvent can be to have a big sale and sell as much stuff as possible above wholesale price.
    Have seen that done a couple of times.
     
    Posted: Dec 12, 2019 By: Mr D Member since: Feb 12, 2017
    #13
  14. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Normally you would use ones recommended by the Liquidators. If you DM me I will recommend one for you.

    If you only have a little stock left probably best to use licensed auctioneers for a valuation.
     
    Posted: Dec 12, 2019 By: Lisa Thomas Member since: Apr 20, 2015
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  15. sueg12

    sueg12 UKBF Newcomer Free Member

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    Thank you
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #15
  16. sueg12

    sueg12 UKBF Newcomer Free Member

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    Thank you, will do
     
    Posted: Dec 12, 2019 By: sueg12 Member since: May 15, 2019
    #16
  17. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

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    She has said that the company has no creditors so there won't be anyone to come back and bite her.

    Why not sell the stock for as much as she can get and then "SpongeBob" the company?
     
    Last edited: Dec 12, 2019
    Posted: Dec 12, 2019 By: Ian J Member since: Nov 6, 2004
    #17
  18. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    S/he has said the Company is insolvent and has referred to Liquidation

    S/he has said there are c£14k of o/s creditors in rent and credit card.
     
    Posted: Dec 12, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #18
  19. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I can't seem to reply to your email for some reason so please could you send me an email direct?
     
    Posted: Dec 12, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #19
  20. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

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    Firstly apologies for referring to sue as "he" - now edited

    Secondly if there is £25k of stock at trade price and only £12k of liabilities even if the stock is sold off at half trade price there is still enough to pay off creditors so there should be no biting of bums and no need to fork out for an expensive IP
     
    Posted: Dec 12, 2019 By: Ian J Member since: Nov 6, 2004
    #20