Closing a business

[Minnsy]

There is a business. It stopped trading in April, it has no assets - no money in the bank, no machinery, nothing. It does have creditors - all overseas.
How is the most appropriate way to wind up/strike off the business.
Looking at the Govt site, as it has creditors, the suggestion might be liquidation - however there is nothing to 'liquidate'. So is winding up/striking off the best option, and tell the creditors that this is happening?
What options are available in this situation?

 

[MyAccountantOnline]

There is a business. It stopped trading in April, it has no assets - no money in the bank, no machinery, nothing. It does have creditors - all overseas.
How is the most appropriate way to wind up/strike off the business.
Looking at the Govt site, as it has creditors, the suggestion might be liquidation - however there is nothing to 'liquidate'. So is winding up/striking off the best option, and tell the creditors that this is happening?
What options are available in this situation?

Is the business a limited company?

 

[Minnsy]

Is the business a limited company?

Yup. a Limited company.

 

[MyAccountantOnline]

Yup. a Limited company.

In that case I'd take a look at the striking-off process - it may be possible for you to use that.

https://www.gov.uk/strike-off-your-company-from-companies-register/apply-to-strike-off

 

[ChrisCallaghan]

Hi @Minnsy ,

Looking at the Govt site, as it has creditors, the suggestion might be liquidation - however there is nothing to 'liquidate'

Though I see where your logic has taken you there, this is not the case. Even where there are no assets, a liquidation process can still be appropriate.

Can I ask about the level of debt? How many creditors are there, and how much are they owed? What type of creditors are? When you say overseas, where are they located?

 

[Minnsy]

Hi @Minnsy ,



Though I see where your logic has taken you there, this is not the case. Even where there are no assets, a liquidation process can still be appropriate.

Can I ask about the level of debt? How many creditors are there, and how much are they owed? What type of creditors are? When you say overseas, where are they located?

There are a handful. One in the UK, rest in Middle East or Asia. Trade creditors - the debt being website inventory.

 

[ChrisCallaghan]

Amounts?

 

[Minnsy]

Amounts?

From $9 up to $35k. The company has zero assets. So who would pay the liquidators?

 

[ChrisCallaghan]

You'd have two options here.

You certainly could attempt to strike off. You will need to cease to trade for a period of 3 months, and you will also have to write the creditors (regardless of where they are located) to inform them you are attempting to close the company via a strike off application. Failure to do either is considered an offence. Please note that creditors have the right to object to your attempt to close the company in this way. Given the values, I would guess there's a high chance at least one of them may object.

For help with this, the following template letter from a debt charity is helpful:

Considering strike off | Sample letter | Business Debtline

Use this letter to tell your creditors and members of your limited company that you are considering strike off.

www.businessdebtline.org

The following step by step process from this forum can also be helpful:

CLOSING A LIMITED COMPANY WTH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER

CLOSING AN INSOLVENT LIMITED COMPANY WITH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER If a company is unable to carry on trading due to becoming insolvent the standard procedure for closing it down is for the directors to appoint an Insolvency Practitioner to liquidate it...

www.ukbusinessforums.co.uk

If the creditors do object, this will keep the company legally open, and the creditors could continue any appropriate debt enforcement action.

Alternatively you could explore a Voluntary Liquidation, but as I suspect you've guessed, you would have to fund the liquidator's fees in this case yourself. The positive with this option is that creditors cannot object, and the company would be closed within a matter of weeks. For more information about the liquidation process, see the below:

Creditors Voluntary Liquidation (CVL) - Online Debt Advice

Creditors Voluntary Liquidation (CVL) is a formal insolvency process to close an insolvent company. If your business is struggling, contact us

www.wilsonfield.co.uk

In summary, you could consider attempting to strike off first, ensuring that you notify creditors and cease to trade for the required 3 month period first. If any of the creditors do object, perhaps then would be the right time to consider Voluntary Liquidation. Should you need advice and quotes for this process, I'd be happy to offer a cost free and no obligation consultation by phone.

Hope the above helps!

 

[UK Contractor Accountant]

The other option, of course is to do absolutely nothing and wait for Companies House to Strike Off the company for non filing of documents.

 

[Minnsy]

You'd have two options here.

You certainly could attempt to strike off. You will need to cease to trade for a period of 3 months, and you will also have to write the creditors (regardless of where they are located) to inform them you are attempting to close the company via a strike off application. Failure to do either is considered an offence. Please note that creditors have the right to object to your attempt to close the company in this way. Given the values, I would guess there's a high chance at least one of them may object.

For help with this, the following template letter from a debt charity is helpful:

Considering strike off | Sample letter | Business Debtline

Use this letter to tell your creditors and members of your limited company that you are considering strike off.

www.businessdebtline.org

The following step by step process from this forum can also be helpful:

CLOSING A LIMITED COMPANY WTH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER

CLOSING AN INSOLVENT LIMITED COMPANY WITH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER If a company is unable to carry on trading due to becoming insolvent the standard procedure for closing it down is for the directors to appoint an Insolvency Practitioner to liquidate it...

www.ukbusinessforums.co.uk

If the creditors do object, this will keep the company legally open, and the creditors could continue any appropriate debt enforcement action.

Alternatively you could explore a Voluntary Liquidation, but as I suspect you've guessed, you would have to fund the liquidator's fees in this case yourself. The positive with this option is that creditors cannot object, and the company would be closed within a matter of weeks. For more information about the liquidation process, see the below:

Creditors Voluntary Liquidation (CVL) - Online Debt Advice

Creditors Voluntary Liquidation (CVL) is a formal insolvency process to close an insolvent company. If your business is struggling, contact us

www.wilsonfield.co.uk

In summary, you could consider attempting to strike off first, ensuring that you notify creditors and cease to trade for the required 3 month period first. If any of the creditors do object, perhaps then would be the right time to consider Voluntary Liquidation. Should you need advice and quotes for this process, I'd be happy to offer a cost free and no obligation consultation by phone.

Hope the above helps!

That clarifies what I had in my mind. The company last traded in April this year, so is in a position to be struck off. I will let the creditors know, however given the nature of the debt, I suspect (hope) they will write it off. However it they do proceed down the winding up procedure, as there the company has no assets, I am not sure what the benefits would be to them.
Many thanks for your input, which I am sure was not AI generated!

 

[WaveJumper]

And you are 100% confident there are no PGs attached to any of your creditors. You did not mention this but assume no BBL taken

 

[Minnsy]

No PG's with any of the creditors and no BBL taken...
One creditor has objected. I could reverse the application to strike off and ask they (the creditor) issues winding up procedure (re the Spongebob scenario).... Or I guess this would happen anyway following objection?

 

[Elliot Green]

The other option, of course is to do absolutely nothing and wait for Companies House to Strike Off the company for non filing of documents.

Not filing documents is impermissible.

 

[ChrisCallaghan]

No PG's with any of the creditors and no BBL taken...
One creditor has objected. I could reverse the application to strike off and ask they (the creditor) issues winding up procedure (re the Spongebob scenario).... Or I guess this would happen anyway following objection?

No point 'revearsing' the application to strike off. A new date will have been set by Companies House for it to go through, and it will be up to the creditor if they wish to lodge further objections.

However, why would they cease to object? What is in it for them? There's also no reason for them to spend thousands of pounds to obtain a winding up petition if your company has nothing.

If they have objected to strike off, my guess would be they wish to keep your company legally open indefinitely so they can pursue other debt collection options, e.g. CCJs and High Court Enforcement (aka bailiffs) - this is significantly cheaper than going for a winding up petition.

If your company has no assets, then there would be nothing for a bailiff to take, however please be mindful that bailiffs can visit any address linked to a director, such as a home address.

 

[Elliot Green]

No PG's with any of the creditors and no BBL taken...
One creditor has objected. I could reverse the application to strike off and ask they (the creditor) issues winding up procedure (re the Spongebob scenario).... Or I guess this would happen anyway following objection?

If you applied for voluntary strike off it may still happen after a period of time.

 

[Elliot Green]

No point 'revearsing' the application to strike off. A new date will have been set by Companies House for it to go through, and it will be up to the creditor if they wish to lodge further objections.

However, why would they cease to object? What is in it for them? There's also no reason for them to spend thousands of pounds to obtain a winding up petition if your company has nothing.

If they have objected to strike off, my guess would be they wish to keep your company legally open indefinitely so they can pursue other debt collection options, e.g. CCJs and High Court Enforcement (aka bailiffs) - this is significantly cheaper than going for a winding up petition.

If your company has no assets, then there would be nothing for a bailiff to take, however please be mindful that bailiffs can visit any address linked to a director, such as a home address.

I am not aware a creditor can lodge a stream of objections in perpetuity without taking some legal action. Normally I understand there are a couple of bites at the cherry and after around 6 months Companies House restart voluntary strike off procedures.

 

[ChrisCallaghan]

I am not aware a creditor can lodge a stream of objections in perpetuity without taking some legal action. Normally I understand there are a couple of bites at the cherry and after around 6 months Companies House restart voluntary strike off procedures.

Fair clarification. However so long as there is active legal action (e.g. seeking a CCJ, or debt with HCEO) then the effect is indefinite, is it not?

Separate from OP's case and questions, it seems that BBL lenders and/or Department of Business and Trade can and are objected to strike off, indefinitely, and without taking any form of legal action. Any reason why they would be allowed to do this, but not other creditors?

 

[Elliot Green]

Fair clarification. However so long as there is active legal action (e.g. seeking a CCJ, or debt with HCEO) then the effect is indefinite, is it not?

Separate from OP's case and questions, it seems that BBL lenders and/or Department of Business and Trade can and are objected to strike off, indefinitely, and without taking any form of legal action. Any reason why they would be allowed to do this, but not other creditors?

I am not aware inaction is a right of anyone to freezing the strike off process. I am going to lodge an FOI to see if there is a specific Companies House policy on this. I am not aware of anything in law. If a director objected to such inaction then perhaps the policy might be clearer. I suspect many don't push the point.

 

[ChrisCallaghan]

I am not aware inaction is a right of anyone to freezing the strike off process. I am going to lodge an FOI to see if there is a specific Companies House policy on this. I am not aware of anything in law. If a director objected to such inaction then perhaps the policy might be clearer. I suspect many don't push the point.

I'll be intrigued to hear the response you get on any FOI request on this subject. I'm sure we'd all be grateful if you share!

 

[Elliot Green]

I'll be intrigued to hear the response you get on any FOI request on this subject. I'm sure we'd all be grateful if you share!

Of course.

 

[Lisa Thomas]

I know you say there are no assets but are there any debtors? Overdrawn Director Loan Accounts? Is there value in the website/domain?

 

[Minnsy]

Hi, all our business was in the Middle East. We have one debtor, a Saudi agency, OMG.
Who owe us a little over $4k. I am pressing hard for them to make payment - however they pay when it suits them. Not when it suits us.
Aside from that, no.

 

[Lisa Thomas]

You may have enough to cover the cost of liquidating in court, once you have collected the debt.

 

[Elliot Green]

Companies House response to an FOI request about its dissolution policy following a creditor's objection to striking off says:

"All objections receive a six month hold regardless of whether the objector is another government body or a member of the public."


Full request and response

"Please confirm the existence of any policies in place that address the matter of objections to voluntary strike off a company under the DS01 procedure and or compulsory striking off and which determine the course of action to be taken.

Please provide a copy in response to this email a copy of such policies and procedures.

The policies to focus on are those which:

1. Detail the criteria deployed to suspend the strike off process and periods of time for which suspension will be granted.

2. Detail the approach adopted if it is different when an objection is received from any government body or agency as opposed to some other party.

This information is not held.

To be of assistance, we do not have a document which sets out the criteria as per your request.

An interested party such as a creditor can object to a company being struck off. At present the objection can be made online or via email/writing and must include evidence to support the objection. Objections can only be submitted once the company has appeared in the London Gazette.

If an objection is not accepted, a temporary hold is placed on the company to allow the objector time to resubmit an acceptable objection. If after this time we do not have sufficient evidence, the hold will be removed and the strike off will continue.

If an objection is accepted the strike off action will be suspended for 6 months. If no further objection is received, the strike off action will recommence.

All objections receive a six month hold regardless of whether the objector is another government body or a member of the public."