Business Phone Contract (O2) and closure of business

[Sproik]

I am looking to close my O2 Business account. The limited company to which the contract was created with ceased trading at the end of last month and has been folded. O2 are asking for £400 as there are 12 months left on a 24 month phone contract.

I accept I'll probably end up paying the bill but am curious as to where I stand legally on this. As far as I'm aware, the maximum they can claim is the share capital of the company (which is £2). Is this correct?

 

[Michael Gerard]

If O2 has entered into an agreement with the limited company, then you are not personally liable. Check the contract and if it is with the limited company, tell O2 to go forth and multiply.

 

[Sproik]

Double post, sorry

 

[Sproik]

It's with the company, I already checked. Are there likely to be any other repercussions from this (other than my phone being disconnected of course!)?

I presume it won't be possible to keep the number on a PAYG sim or anything...

 

[Michael Gerard]

If the company is has ceased trading, you should not be using the phone and should inform O2 of this and where they can collect the phone from. The phone, SIM card and phone number is not your property so you cannot 'keep' it.

You could of course take over the contract?

 

[Sproik]

Thanks Charlie, this is where it gets tricky. I probably need to go through the contract carefully - there was an upfront payment for the phone when the contract started so I'm not sure where "ownership" would lie. As far as the number goes, it's a number I've carried for 9 years over 4 different operators so again, not sure where the boundary lies on this. The simcard of course would be returned.

Typically small assets like a phone are wiped off as assets in the first year.

 

[Williams lester]

Typically small assets like a phone are wiped off as assets in the first year.

They may be fully depreciated in the accounts, but still remain the property of the limited company.

 

[Sproik]

All other items in the company that were depreciated in the accounts were sold to myself for a minimal sum prior to closure of the company (laptops, PC's, furniture, phones).

Don't misinterpret here If out of nothing other than goodwill I'll probably pay the amount O2 are asking for, I just want to fully understand the legal ground first and what my options are. If I'm not well informed, I can't make a well informed decision

 

[Williams lester]

All other items in the company that were depreciated in the accounts were sold to myself for a minimal sum prior to closure of the company (laptops, PC's, furniture, phones).

Don't misinterpret here If out of nothing other than goodwill I'll probably pay the amount O2 are asking for, I just want to fully understand the legal ground first and what my options are. If I'm not well informed, I can't make a well informed decision

All transactions between yourself and the company should be at market value, not for a minimal sum.

 

[Sproik]

William, the company is being closed. Transferring monies or assets to it merely result in them being repaid to us as cash in the final dividend before closure.

 

[Williams lester]

William, the company is being closed. Transferring monies or assets to it merely result in them being repaid to us as cash in the final dividend before closure.

I am slightly confused now, you have closed the company...but have creditors outstanding (e.g. O2)...but you have obviously made a profit as you are paying a dividend!

So, why is there no money to pay O2...and what about other creditors such as HMRC?

 

[Sproik]

Company made a profit last year and a loss this year, but there is excess in the company from last year which our accountant has told us we will receive upon closure. We have settled all debts and outgoings but I am looking for advice on the O2 contract on whether to settle to the month of closure, or 12 months in advance on the end of contract.

 

[Williams lester]

Settle to the end of the contract.