How to dissolve a Company to end a Lease

[simon164]

hello everyone

I wondered if anyone could offer me some advice?

I have had a business for 11 years and took on a larger premises just under 4 years ago on a 5 year Lease. Initially everything was going very well. We took on good staff etc but it suddenly turned and we have had the most terrible luck in virtually every area..!its been a real struggle the last 2 years particularly. 2017 was incredibly difficult and stressful for many reasons and actually the worst year of the lot. I constantly worry about meeting my financial obligations and it’s making me ill.

I have been increasingly depressed by it all and have decided after much deliberation that I need to get out of it for my own sanity! Life is too short and I am going to end up in an early grave from worry.

My Landlord is very hard-nosed and definitely will not release me from the Lease early. As far as he is aware we are trading successfully and I have not been late with a rent payment (I have killed myself to pay the quarterly rent on time religiously).

My alternative options as I see it are to either sublet the property out or fold my Company. I have a licence to sublet in place however I would still be responsible if the tenant didn’t pay. I really don’t like this idea at all. The rent is £35,000 a year plus damage liability etc.

I am therefore giving serious thought as to winding the company up. I provided it with a £80k cash injection when we moved to the site as a director loan. This is currently invested in stock and I would like to withdraw it and have the company wound up / struck off. We have some furniture and general equipment etc but nothing else of any significance. I owe HMRC around £1500 for corporation tax and a late filing penalty to companies house of £500. Other than that, nothing of any significance that can’t be settled. I do have a phone and broadband with BT.

My biggest priority is to basically end and get out of the lease - ideally as quickly as possible. I did not sign as a personal guarantor and it is purely in my Limited Company’s name. A Deposit of £8750 was lodged which I accept I will lose.

How would you say is the best way to do this? I have read that I can just not file anything and the company will get struck off provided no one objects to it. I have also seen I can apply for it to be struck off. What I really want to avoid is an objection. I don’t think it is wise to alert my landlord to the company being wound up as he may try to keep it open by objecting. I also need to try and get the timing right as I pay the rent quarterly. My accounts are next due to be filed in mid February.

In terms of the stock, for speed am I able to transfer that into my name rather than sell and repay the loan I gave (obviously at purchase value)? What would be the process with regard to any other minor assets as mentioned?

I do feel really bad over all of this and it’s not something I feel at all proud of. But I just can’t continue to run myself into the ground, nor afford to lose what I invested initially. I fear that will be the outcome if I stay until the end of the tenancy. I am not generally someone who throws the towel in but enough is enough.

Any advice/help is really appreciated and thanks a lot for taking the time to read the above.

 

[Lisa Thomas]

Hi

You need to stop focusing specifically on the lease for a moment.

The Company is insolvent and you need to deal with the situation as a whole.

The options are therefore Liquidation - voluntarily or via Court, or try and dissolve it.

If Liquidated the liquidator will then deal with the landlord and the lease will normally either be voluntarily surrendered or disclaimed. As no-one has given a PG then this should not be something for you to be concerned with.

HMRC (and possibly the landlord) are likely to object if final returns/accounts not filed.

You mustn't transfer the company assets into your own name as this is illegal, unless you get a formal valuation and physically pay for them at market value.

If you Liquidate the Lqr can help you with this to ensure you do not commit any misconduct.

 

[Lisa Thomas]

You may wish to repost your post to the insolvency section on the forum for more responses.

 

[simon164]

Thanks for your advice Lisa.

I guess my biggest concern revolves around release of my Directors Loan to the Company. Basically any money that has been made over the years has gone into setup costs and day to day expenditure/wages etc. We have gotten absolutely no where and last year have undoubtedly lost money. I am not even drawing a salary and it makes no sense to continue due to the crippling costs. What didnt help either was last year I had to find £25,000 in Legal Fees against someone who defrauded us. The costs just sky-rocketed and whilst we won, finding the assets (around £50,000 awarded) is proving to be virtually impossible due their bankruptcy / other creditors coming forward. One of which is owed over £500,000.

We have had a massive downturn in business last year and also have had terrible luck with Staff - 2 of which stole from us last year. I just feel the market has totally changed and continuing here would be foolish, throwing good money after bad.

Would I be better off clearing the debt with HMRC and then voluntarily attempting to wind the Company up? As stated, aside from Companies House, I don't owe anything significant elsewhere.

 

[Lisa Thomas]

If you are owed the DLA then unfortunately you will claim alongside all other unsecured creditors/write this off.

If you owe the Company money you will need to speak to the Lqr about repayment. Some may allow you time to pay back some/all of this in installments, depending on the circumstances.

You shouldn't really pay HMRC because:

1) This will amount to a preference and could come back to bite you
2) What is the point of paying just HMRC if you are liquidating? I'm not quite sure of the reason?
3) This will reduce the funds you have available to Liquidate.

Liquidate the Company and the Lqr will pay dividends in the correct order to creditors, if sufficient funds are available.

However if they are the only creditor and can be paid in full then you could pay them, complete all the final returns (bearing in mind the accountancy costs) and try and dissolve the Company.

Any employees should be able to claim for redundancy, notice, wage arrears, pension shortfalls and holiday pay form the Redundancy Payments Office if the Company is liquidated. You may also be able to claim.