Closing my company with debt

[janeandbertie]

Hoping someone can advise, my company is no longer viable and due to my ill health and finances I have to close it.
Problem is it has debt in the form of a £22.5k BBL and about £3k VAT. I do not take a wage or dividends from this company, in fact it owes me over £100k. I know this will be written off.
I have no money to employ a liquidator, what options are open to me, if any? I have seen companies who buy such companies but I am not sure if they are a scam?
The only asset is stock worth about £2.4k cost price but some of the stock has deteriorated over time.

I also have to be wary of affecting another company I am director of.

Believe me, I have strung this out for as long as I can trying to turn it around.

 

[Robert Moore]

Sorry to hear this. If you have no money to liquidate then you will have to wait for the bank to wind up the company. I would suggest you use the spongebob plan ( you will find this referenced on this forum). https://www.companyrescue.co.uk/gui...-the-spongebob-plan-to-close-a-business-4230/ You may find it a bit harder to raise credit for your other company as credit checking will show the director has had a previous failure. Good luck

 

[WaveJumper]

From other threads I have read on these companies that buy companies in this situation they all seem to be a scam so I would be very sceptical of going down this route.

Hopefully some of our more experienced members in this field will be along shortly to offer advice and direction

 

[Robert Moore]

From other threads I have read on these companies that buy companies in this situation they all seem to be a scam so I would be very sceptical of going down this route.

Hopefully some of our more experienced members in this field will be along shortly to offer advice and direction

Absolute Scam AVOID. Especially if you owe the company any money.

 

[ChrisCallaghan]

Hello @janeandbertie ,

Firstly I am very sorry to hear about your situation. Personally I have never been a fan of organisations that offer to buy indebted companies. This very subject was has been covered in this forum if you would like to have a look for it.

For that reason I would agree with @Robert Moore's post. In short, you could either follow SpongeBob's plan, or you could instruct an insolvency practice to liquidate your company.

SpongeBob's Method: See the following link for the full guide: https://www.ukbusinessforums.co.uk/...ich-to-pay-an-insolvency-practitioner.316523/

The major benefit of this method is that it is free. The negative is time. Directors I speak with who follow this plan typically finds it takes 9 - 12 months until their company is finally dissolved, as BBL lenders are not currently taking action to wind up companies.

Voluntary Liquidation: For this you would contact a firm of licensed insolvency practitioners. Most would be happy to give you a free consultation about the process, and then give you a quotation for their services. The obvious negative with this option would be the costs involved, but the positive would be your company being closed in weeks, rather than months.

Both of the above are perfectly valid ways to close your company. It is just a question of which option you feel is best for you.

 

[ChrisCallaghan]

Personally I have never been a fan of organisations that offer to buy indebted companies. This very subject was has been covered in this forum if you would like to have a look for it.

The thread I referred to is here: https://www.ukbusinessforums.co.uk/threads/selling-a-business-in-debt.415078/

It's a bit of a lengthy thread but it gives several people's opinions on selling an indebted company.

 

[Lisa Thomas]

I think your options are:

1. Walk away and wait for the company to be struck off by Companies House, (or liquidated which is unlikely based on the circumstances)

2. Liquidate in Court. The Company will need to find £2-4k for this, so perhaps the funds could be raised by selling the stock. Maybe to your other company (as long as it is sold at at least at market value) The liquidation will take several months to take place depending on court availability.

3. Liquidate via a CVL with an IP of your choice. I suspect it will costs at least £5k plus VAT (the VAT should be recoverable). This will be the more expensive route but will give you closure quickly as can happen within 2-3 weeks so you could have it all done and dusted by the end of April.

 

[janeandbertie]

Thanks for all the advise so far.

I definitely felt selling it was not the right thing to do, and reading that forum post just confirmed it.

If I was able to sell the stock as a job lot, and used this to pay for a voluntary liquidation, would this be acceptable? or against the rules?

I really don't want to affect the other company I am director of, so I am not sure about the Spongebob plan you linked.

 

[ChrisCallaghan]

If I was able to sell the stock as a job lot, and used this to pay for a voluntary liquidation, would this be acceptable? or against the rules?

So long as the assets are sold for fair market value (i.e. the best price you can get) and you record the transactions, then no issue with this.

I really don't want to affect the other company I am director of, so I am not sure about the Spongebob plan you linked.

To be fair, the SpongeBob plan should not have any real impact on any other company that you are a director of. As mentioned previously, the main issue is just that takes a good while and that you have to put up with collection calls & letters from the BBL lender until the company is either successfully dissolved or wound up by a creditor.

 

[janeandbertie]

Thanks, would the collection calls and letters come to my home address or the registered business address?
Also, with the spongebob plan, I am worried about "find it a bit harder to raise credit for your other company as credit checking will show the director has had a previous failure" mentioned above.

 

[Lisa Thomas]

If I was able to sell the stock as a job lot, and used this to pay for a voluntary liquidation, would this be acceptable? or against the rules?

Yes, as long as it's sold at market value.

I really don't want to affect the other company I am director of, so I am not sure about the Spongebob plan you linked.

Issues will only arise for your other directorship if you are bankrupt or disqualified.

 

[ChrisCallaghan]

Thanks, would the collection calls and letters come to my home address or the registered business address?

They would be allowed to make calls & send letters to both, but they cannot send collection agents/bailiffs/High Court Enforcement officers to either address.

Also, with the spongebob plan, I am worried about "find it a bit harder to raise credit for your other company as credit checking will show the director has had a previous failure" mentioned above.

The same would be true following a voluntary liquidation.

 

[Lisa Thomas]

Hi Chris

Can you clarify what you mean by creditors not being allowed to send HCO's to the company's address?

Thanks

 

[ChrisCallaghan]

Hi Lisa,

I'd have to find that article/thread where the collection criteria for BBL lenders was listed, but it specifically stated that the cannot employ any form of doorstep collection activities for BBLs.

 

[DontAsk]

I am surprised no one has asked, does the company have any debts with personal guarantees?

 

[ChrisCallaghan]

I am surprised no one has asked, does the company have any debts with personal guarantees?

Fair question, but the OP only mentioned the BBL and VAT.

@janeandbertie are the BBL and VAT you mention the only outstanding debts in your company's name?

 

[janeandbertie]

Yes, no debt with personal guarantee's and I do not owe the company any money, it is the other way around.
Although I have 2 personal credit cards with this company debt but I am paying these with my salary from the other company and not defaulting on them.

 

[ChrisCallaghan]

@Lisa Thomas

Hi Chris

Can you clarify what you mean by creditors not being allowed to send HCO's to the company's address?

Thanks

Hi Lisa, took me a moment to find the below.

https://www.nao.org.uk/wp-content/uploads/2021/12/The-Bounce-Back-Loan-Scheme-an-update.pdf

See the table on pg 45 of the report (pg 47 of the pdf). It states "Debt collection agents optional. No doorstep visits"

 

[ChrisCallaghan]

Yes, no debt with personal guarantee's and I do not owe the company any money, it is the other way around.
Although I have 2 personal credit cards with this company debt but I am paying these with my salary from the other company and not defaulting on them.

Sorry to ask for clarification - are these personal credit cards, or credit cards in your company's name, with the individual directors named as cardholders?

 

[janeandbertie]

Personal credit cards in my name

 

[Lisa Thomas]

Sorry to ask for clarification - are these personal credit cards, or credit cards in your company's name, with the individual directors named as cardholders?

Sorry Chris, I thought they were ordinary creditors OP was asking about and didn't spot it was BBL!

 

[ChrisCallaghan]

Personal credit cards in my name

Thank you for clarifying. You mentioned you are managing these, but please come back to this forum if you require any personal debt advice.

 

[ChrisCallaghan]

Sorry Chris, I thought they were ordinary creditors OP was asking about and didn't spot it was BBL!

To be fair Lisa, the OP has mentioned a small VAT liability as well, so worth clarifying.

@janeandbertie , in an early message when I mentioned....

cannot send collection agents/bailiffs/High Court Enforcement officers to either address

..... this only refers to your BBL lender, not HMRC for the VAT liability. That being said, I think any visit from HMRC agents is unlikely for £3k VAT.