Advice needed - Ltd company owes me money and has 'ceased trading'

[upsite]

Hi all,

A Ltd. company has sent me a letter that they have 'ceased trading' due to lack of funds. They owe me from 3 invoices which are now 4, 3 and 2 months overdue the original 30-day agreement.

What can I do about this? Does the company not have to go into administration/liquidation in this situation? Surely they can't just 'decide to cease trading'?!

I'm a sole trader having done web development work for them.

Thanks in advance.

 

[Jenni384]

Generally speaking, if they are insolvent they have no choice but to cease trading, it would be illegal for them to continue trading if they cannot meet their liabilities as they fall due.

There are 3 options:
1. Company applies for voluntary liquidation
2. A creditor applies to place the company in liquidation
3. The company applies to get the company struck off using form DS01 - they have to write to all creditors if they are going to do this, at which point you can tell CoHo if you have an objection.

I'm afraid it sounds like you may be on a sticky wicket with this one. If the company goes into liquidation, you may get some money, you may not, it depends on any assets in the company.

 

[bovine]

yes, they can. Its a this point that they are waiting for someone to go through the legal process to put them into administration. Usually hmrc will do this, as often they are the biggest debtors.

Unfortunately, you are unlikely to get any money. Best thing to do is move on. I know thats painful to hear, but it is usually best.

The only caveat on that is do check they have stopped trading!

 

[Spongebob]

What can I do about this? Does the company not have to go into administration/liquidation in this situation? Surely they can't just 'decide to cease trading'?!

The only legal requirement of a director finding that his company is insolvent is to cease trading.

There is no requirement for a director to appoint a receiver or liquidator; it is perfectly lawful to leave the company 'in limbo' waiting either for a creditor to wind it up or for Companies House to strike it off.

None of this helps you, of course. You have my sympathies but Bovine is quite correct. You are unlikely to get any of your money and you need to move on taking more care who you give credit to in future.

They owe me from 3 invoices which are now 4, 3 and 2 months overdue the original 30-day agreement.

My advice would be not to do any more work for anybody who hasn't paid last month's bill!

 

[cart-com]

The only legal requirement of a director finding that his company is insolvent is to cease trading.

There is no requirement for a director to appoint a receiver or liquidator; it is perfectly lawful to leave the company 'in limbo' waiting either for a creditor to wind it up or for Companies House to strike it off.

None of this helps you, of course. You have my sympathies but Bovine is quite correct. You are unlikely to get any of your money and you need to move on taking more care who you give credit to in future.




My advice would be not to do any more work for anybody who hasn't paid last month's bill!

sponge bob i read many of your posts and you are the man lol

 

[Alan R Price]

upsite

You do have the option of taking legal action against the company however this will probably be a waste of time if it is insolvent. Spongebob is correct that the directors don't really have to take any action however you could try contacting them using the approach that you just need to clarify the position: you understand that they are not in a position to settle your debt but are they going to liquidate the company and if so is there an insolvency practitioner involved and who is it? What is the time-scale? What is happening about the website? Is it still up and do they want to use it in a phoenix business? (If so, they may have to pay you all or part of what they owe you.)

You are entitled to ask them about the assets and liabilities of the business - they may ignore you or tell you to "go away" but it is undesirable for the company to be left in limbo - there may be assets you don't know about which the directors are quietly spiriting away into a new business or for their own benefit, which they have no right to do.

It's worth making a few enquiries with other suppliers, employees etc. if you know any, just to see if there is any leverage you can apply.

 

[JustSo]

I've a similar problem to the above - unpaid invoices and the Limited Company is going into liquidation - however, it should be a going a concern and the LLP over the limited company appears to have taken much of the funds outof it. (It's basically the same people.)

Is ther anythiong one can do to stop them taking the money out and honour their debts (which they admit).

Thanks

 

[Spongebob]

I've a similar problem to the above - unpaid invoices and the Limited Company is going into liquidation - however, it should be a going a concern and the LLP over the limited company appears to have taken much of the funds outof it. (It's basically the same people.)

Is ther anythiong one can do to stop them taking the money out and honour their debts (which they admit).

Thanks

If the company goes into liquidation a liquidator will be appointed to deal with the situation and to investigate the reasons for its failure. If you have evidence of wrong-doing by the directors you should go with it to the liquidator. He has the power to reverse any unlawful transactions and to recommend sanctions against directors who have acted unlawfully or recklessly. Any monies left over from the realisation of the company's assets and after the payment of the liquidators fee is distributed amongst the creditors.

Don't hold your breath, though!

 

[Alan R Price]

I've a similar problem to the above - unpaid invoices and the Limited Company is going into liquidation - however, it should be a going a concern and the LLP over the limited company appears to have taken much of the funds outof it. (It's basically the same people.)

Is ther anythiong one can do to stop them taking the money out and honour their debts (which they admit).

Thanks

Good advice from Spongebob there.

Do you know anybody else who is owed money by the company? You could arrange to attend the creditors' meeting with them and question the directors about what they have been doing. If you have enough voting power (simple majority in value) you may be able to appoint your own liquidator to replace the directors' choice if you would have ore confidence in somebody perceived to be more independent (although the nominated liquidator should act impartially and in the best interests of all the creditors).

 

[hotel-man]

OP

Im guessing that you added some personal info into the website work you did for them ie wrongly spelt a word or added a meaningless sentence within a comment on script or something.

It may well be that this company re-starts under a different name and uses your (unpaid) work for that business.

It would be good if you could clearly identify your copyrighted work should the opportunity arise to charge any new company using it.

 

[herewegoagain.]

If you did their website perhaps you could 'doctor' it ?? if you know what I mean.... tell things as they are maybe?? that they dont pay their bills??

As long as you are telling the truth - there should be no comeback..... - tell them you will take the info down when they pay their bills !! - dont forget to change any passwords they have access to....

there is more than one way to skin a cat !

 

[Nuno]

If you did their website perhaps you could 'doctor' it ?? if you know what I mean.... tell things as they are maybe?? that they dont pay their bills??

As long as you are telling the truth - there should be no comeback..... - tell them you will take the info down when they pay their bills !! - dont forget to change any passwords they have access to....

there is more than one way to skin a cat !

This is not good advice.

 

[herewegoagain.]

This is not good advice.

You might think it is not good advice, thats your opinion... good for you...

From personal experience, there are times you have to do 'what is right' =
get your own back !

 

[Nuno]

If you did their website perhaps you could 'doctor' it ?? if you know what I mean.... tell things as they are maybe?? that they dont pay their bills??

As long as you are telling the truth - there should be no comeback..... - tell them you will take the info down when they pay their bills !! - dont forget to change any passwords they have access to....

there is more than one way to skin a cat !

You might think it is not good advice, thats your opinion... good for you...

From personal experience, there are times you have to do 'what is right' =
get your own back !

Yes it is my opinion. I base it on the following possible scenarios:

• If receivers are appointed they will take a dim view of the OP diminishing the value of an asset, (the website). This could lessen and/or slow any payout.
• If no receivers are appointed and the OP tries to claim in the Small Claims court this behaviour will almost certainly lessen any award he may get.
• It is possible that other clients of the OP see this happening and decide not to risk this sort of behaviour from him: they don't know whether or not he will do this at any stage of any dispute do they? Safer to move to someone more professional.
• If the OP's clients have a similar disregard for the law they might just go and lamp him.

As I see it the benefits, ( a transitory 'gotcha'), are far outweighed by the potential costs, which is why I think it a bad idea.

 

[herewegoagain.]

Yes it is my opinion. I base it on the following possible scenarios:

• If receivers are appointed they will take a dim view of the OP diminishing the value of an asset, (the website). This could lessen and/or slow any payout.
• If no receivers are appointed and the OP tries to claim in the Small Claims court this behaviour will almost certainly lessen any award he may get.
• It is possible that other clients of the OP see this happening and decide not to risk this sort of behaviour from him: they don't know whether or not he will do this at any stage of any dispute do they? Safer to move to someone more professional.
• If the OP's clients have a similar disregard for the law they might just go and lamp him.

As I see it the benefits, ( a transitory 'gotcha'), are far outweighed by the potential costs, which is why I think it a bad idea.

The problem is this... dim views or not - if this man has done work and not got paid (as seems to happen so often - for various reasons) he might get 1p in the £1 (if anything)

It is far too easy for a limited company to just 'cease trading' and the 'little man' does get paid what he is owed - and I have known scenarios where a person who has done work (but not been paid) has lead to their own business going to the wall - through no fault of their own !!

I am merely suggesting, although maybe not morally right, sometimes, things have to be done... you may not approve, but....

Disregard for the law? how exactly? - he would be merely stating that fact that he has not been paid for his work.... no one suggested 'lamping' anyone !!

People are all very well sitting in ivory towers, the difference is, sometimes, action has to be taken...

 

[Spongebob]

Yes it is my opinion. I base it on the following possible scenarios:

• If receivers are appointed they will take a dim view of the OP diminishing the value of an asset, (the website). This could lessen and/or slow any payout.
• If no receivers are appointed and the OP tries to claim in the Small Claims court this behaviour will almost certainly lessen any award he may get.
• It is possible that other clients of the OP see this happening and decide not to risk this sort of behaviour from him: they don't know whether or not he will do this at any stage of any dispute do they? Safer to move to someone more professional.
• If the OP's clients have a similar disregard for the law they might just go and lamp him.

As I see it the benefits, ( a transitory 'gotcha'), are far outweighed by the potential costs, which is why I think it a bad idea.

I tend to agree with Herewegoagain. If I was owed money by a company whose website I had access to, and thay told me that they had ceased trading, I would simply take the website down and replace it with a message reading 'This company is no longer trading.'

Sometimes you've got to play hardball.