Help with ltd company next step..

[Jonathan Whiting]

My limited company ran into issues with paying creditors due to payments by customers not being made at all and not coming through on time. I ended last year well and tried to expand too quickly and got ahead of myself it has left me in financial trouble. I appointed a company to manage dissolving my company which was due to happen next month, but today one of my creditors has served the ltd company a wind up petition in the high court.


I owe around £8k to one company, £12k to another, £13 to another and £2k to another, we don't owe money to hmrc as we couldn't afford the accountant to do the accounts and file them. We also deregistered for VAT in Jan.

The company has only be going for 1 year not even that.

My question is what do i do next ? the business management company are giving me 2 options now the wind up petition is issued and we have to enter insolvency,

Which are

Option 1

We can put the company into liquidation which will come at a cost of £4,000.00 + VAT.

Option 2

We can allow the winding up order to be served and let the official receiver liquidate the company. Although we always advise companies to avoid this option, we don’t see that letting the official receiver wind the company up will be to your detriment due to the company being an empty shell.


Option 1 is a lot of money but seems to be a better option after speaking with them but my company does not have any money so it would need to be personal

I don't have any assets as these were bought personally, and we didn't keep any stock only purchased when we needed it.

As a director i met all vat payments, did my accounts and have never done anything wrong. I didnt trade when i knew i couldn't.

So my question is what should i do from here ? i really want to move on from this terrible mistake and learn from my mistakes.

If anybody could help many thanks

Jon

 

[Mr D]

The cheaper option for you personally appears to be the winding up. Same end result for the company, its affairs put to bed and the company dissolved.

The business debts belong to the business, no need you paying personally to dissolve the company when the process will be handled by a creditor paying for the winding up.
Seems rather odd someone owed that small an amount paying more out to wind the company up but that's what they want to do then pointless trying to talk them out of it.

 

[Jonathan Whiting]

Is it a scary/worrying process the wind up part/insolvency ? they seem to think an appointed insolvent officer appointed by myself was the better option.

Is the wind up separate process from the insolvent part ? sorry if being dumb

 

[Scalloway]

they seem to think an appointed insolvent officer appointed by myself was the better option

Probably because you will pay for it, not them.

is the wind up separate process from the insolvent part ?

The company becomes insolvent. This may be followed by the insolvency procedure being started. Winding up is the end result of the insolvency process.

 

[Gavin Bates]

Hi

If you have no funds then let winding up order go through.

Whether it is the Official Receiver or an independent insolvency Practitioner we both have the same duties as follows;

1) realise the assets,there are none.
2) agree the creditor claim
3) review the directors conduct

If you have done nothing wrong you should have no issues.

Maybe the telling question is how much is the current firm that you are working with getting from appointing an IP. By the A’s you may have seen they is no reason to pay to do a strike off.

Hope this helps

Regards

Gavin

 

[Jonathan Whiting]

I obviously haven’t managed the company very well but done nothing illegal/wrong

How long does the process take ? Is it a nasty process or a fairly easy one ?

Thanks for all your help

 

[Gavin Bates]

Hi

Once the court has passed you will get a call from th official receiver ( OR ). The OR will want to meet with you and understand the circumstances and provide them with the accounting records.

In terms of time all liquidations last about a year but your involvement will only be in the first couple of weeks.

Regards

Gavin

 

[Mr D]

Is it a scary/worrying process the wind up part/insolvency ? they seem to think an appointed insolvent officer appointed by myself was the better option.

Is the wind up separate process from the insolvent part ? sorry if being dumb

In a way it's the less worrying option.
Do it yourself and creditors hound you, call all sorts of times, write to you often etc.
Having a professional deal with matters takes all the hassle and stress out of your hands, simply refer everyone to the person dealing with it.

 

[Jonathan Whiting]

In a way it's the less worrying option.
Do it yourself and creditors hound you, call all sorts of times, write to you often etc.
Having a professional deal with matters takes all the hassle and stress out of your hands, simply refer everyone to the person dealing with it.

Should I opt for the paid insolvent officer by me ? Ie £4000 which I can’t afford will have to be personal
Money or use who ever is appointment by the company filing the petition ?? Is there a better option ?

Strange why they have filed a petition I’m guessing for insurance purposes following a procedure maybe ? It’s a 8 grand debt.

Thanks again for help

 

[Mr D]

Should I opt for the paid insolvent officer by me ? Ie £4000 which I can’t afford will have to be personal
Money or use who ever is appointment by the company filing the petition ?? Is there a better option ?

Strange why they have filed a petition I’m guessing for insurance purposes following a procedure maybe ? It’s a 8 grand debt.

Thanks again for help

If you cannot afford £4k then the free one seems the best option.
Why pay £4k when someone else is willing to pay to get the same end result for you?

 

[Jonathan Whiting]

Very true my business management company were selling it to me as the more expensive option is easier as we appoint them but I guess there making money out of my mistakes !

 

[Jonathan Whiting]

Another question

Do I ever meet the insolvent officer ? Do they come to my registered office address or can I meet them somewhere neutral etc ? How formal is the whole
Thing ?

 

[UK Contractor Accountant]

Firstly you need to establsh whether you have an overdrawn director loan account before the liquidation process progresses.

You say the company has debts of £35K plus corporation tax debt. What about VAT- Was that up to date? There are no assets to realise so what was the cause of your Insolvency?

Your posting indicates that it was a cash flow problem due to expanding to quickly - that in its self would not cause a £35K + shortfall in assets.

Unless you were making trading losses the indication would be that you had been taking money out of the money not supported by realised profits.

 

[Jonathan Whiting]

Vat was up to date

Cooperation tax was never done because we couldn’t afford accounts

Re overdrawn directors account , no there isn’t a issue here I only ever took minimum salary never took any unnecessary money out the company.

As your last paragraph says it’s down to profits not being what I expected, 1 company owing us a large sum of money and they have dissolved and other things but nothing that I have caused myself.

 

[Lisa Thomas]

Let the creditor Liquidate the Company.

Then cooperate with the Liquidator.

If you have not committed any misconduct there will be nothing to worry about.

Either way the creditor is solving the problem for you of not having funds to Liquidate the Company.