Insolvency Advice please.

[Bosch]

Hi,

I will like to close my company down for lack of business and personal circumstances. Needless to say, the company is in the loss and wouldn't have money to pay an Insolvency Practitioner to liquidate it.

I want to implement THE SPONGEBOB PLAN but I don't know what do to as I'm still paying a 2 years mobile phone contract and the website hosting in a one-month rolling contract in a way of directors loan but now I'm running out of money.

What should I do first? Both mobile phone and Website hosting withdraw money via Direct Debit from the company's bank account. I've asked the mobile phone company to close the account because of my circumstances but they say if canceled I would have to pay the remaining 12 months all at once.

Thank you very much in advance

 

[kulture]

Its the companies debt not your debt. Unless you have personally guaranteed it you have nothing to fear. Cease trading, implement the spongebob plan.

 

[Bosch]

Hi Kulture,
Thanks for the encouragement but I still need some directions. So you recommend ceasing trading would this means no purchasing or buying for three months before actually striking off?

My last actual purchase was about three months but the company still paying the mobile contract and last month paid the accountants fees. Would this also count as trading? Also, the website hosting company has offered me a year of free hosting as a sign of good faith when hearing I was leaving. I find it's worth keeping the website hosting service but I think it's no a good idea to attach it to the business account or even keeping the company name in the account and domain name.

I'm sorry for too many questions but I really need to understand what it means to cease trading before implementing the spongebob plan.

I also receive a PM from scdirect which apparently does companies for sales. Would you recommend this instead of the spongebob plan?

I'll highly appreciate your feedback,
Thank you very much

 

[Scalloway]

Ceasing trading means stopping selling things or providing a service. Paying bills isn't trading.

 

[Bosch]

Thank you Scalloway,

So I can perfectly apply THE SPONGEBOB PLAN? I was just a bit confused as the way Spongebob defines Ceasing Trading: "No further contracts, either sales or purchase, should be entered into, and work on long-term contracts should cease." I interpreted purchase as being bound to pay the company's bills.

So if I understood, the fact that my company is still bound to pay the remaining months for the mobile phone contract and company's website hosting doesn't necessary means being trading. That is the first step of THE SPONGEBOB PLAN achieved. Then, how can I continue with sending letters to the creditors? [mobile and hosting company]. So should I ask my bank to stop the Direct Debits or close the accounts completely? Would sending the letter in THE SPONGEBOB PLAN accomplish this aim to avoid the company's bank accounts going overdrawn? Feeling stuck, please some help.

 

[Scalloway]

I would ask your bank to stop the direct debits. If there is money in the bank it should be used to pay off your creditors in proportion to your debt.

 

[Bosch]

Thanks for getting back Scalloway. I feel you're not advising me to follow the THE SPONGEBOB PLAN. Please correct me.

The company has not creditors yet apart from myself who still borrowing money to the company to pay the bills. If I cancel the telephone contract and web hosting then they will ask me to pay the remaining money. But how would I pay it if the company in the first place doesn't no have that money? That is why I want to follow the SPONGEBOB PLAN. Please, some enlightenment.

 

[StevensOnln1]

Scalloway is suggesting that you follow the Spongebob plan. If the company has no money then it cannot pay. There is no requirement for you to pay the company's debts personally unless you have given a personal guarantee.

 

[Scalloway]

I can only echo what StevensOnln1 has said. Stop the direct debits and implement the spongebob plan.

 

[Bosch]

Thank you StevensOnIn1 and Scalloway for your reply. I'm so afraid of even starting Spongebob plan because I don't want it to get it wrong. So please be patient with me. Also, I was just sent a letter from HMRC asking to deliver a Company Tax Return for the period 13 August 2015 to 31 March 2016.

Firstly, do I still need to submit the Company Tax Return?
Secondly, are the following steps correct and in order?

1. Cancel the contracts with the mobile company and website hosting company by writing a letter to them or
2. Stop the Direct Debits
3. Transfer the remaining money from my Company's bank account to personal account as payback of Director's loan and close the company's bank account
4. Send Spongebob plan's letter to creditors (the mobile company and website hosting company)
5. Follow the rest of Spongebob plan

Thank you very much in advance for your kind assistance

 

[Scalloway]

If your strike off goes to plan you will have closed the company down before the Corporation Tax Return is overdue. I wouldn't bother submitting it.

 

[Bosch]

Thank you Scalloway. If I understand I can start the plan right now as I've already ceased trading (no need to wait 3 months before sending the letter to creditors?). So will you recommend stop the bank Direct Debit first or send the Spongebob plan's letter to creditors as in step 2? Apply for Strike-Off is marked as optional in step 4 of the plan and it's applicable for when the company's DLA is overdrawn. So do you still recommend applying to Companies House to have the company struck off the register using form DS01? Would this accelerate the process for the company to ‘dissolved’ on the Companies House website? Do you have an idea of how long the whole process will take till see the company dissolved?

I'm tempted to keep the company's website running as hosting has been granted for a year for free. Would this affect the process of dissolving the company even if website change its name?

Once again thank you for you patience and time

 

[Scalloway]

I would stop the direct debits and send the spongebob letters at the right away. Apply for dissolution as soon as three months pass since you ceased trading. You must send a copy of the DS01 to all creditors. If none of the creditors object to the dissolution then I believe it will take 3 months or so.

 

[Bosch]

Thank you Scalloway for your prompt response. I will follow your advice. So if choosing no to apply for strike-off using form DS01 the process would take longer?

Thanks again for your advice

 

[Scalloway]

If you don't apply for strike off now Companies House and HMRC will continue pursue you. It is possible that you will get fined personally for failure to file accounts. As far as I recall this counts as a criminal conviction.

I can assure you from reading previous posts in this forum that going for strike off at the earliest opportunity is the best option.

 

[Bosch]

I was quoting Spongebob's plan in not applying for striking off since he said its optional starting to get confuse now. Am worry about the timing as for the winding up I will have to wait for their reply and attend the interview at some point. I am sure I won't be in the country by then as I am moving within a few weeks.

 

[Scalloway]

Going for strike off now will cost you £10. If you don't apply for strike off you can potentially be taken to court for failing to file accounts and end up with a criminal record. Companies House and HMRC will continue to to pursue you.

Am worry about the timing as for the winding up I will have to wait for their reply and attend the interview at some point. I am sure I won't be in the country by then as I am moving within a few weeks.

Are you expecting the company to be wound up?

 

[Bosch]

Hi Scalloway,

No I'm not planning to wound up. Is it not a natural step in the Spongebob's plan?

 

[Lisa Thomas]

Hi

Company's options are:

1. Instruct IP to help Liquidate Co through CVL
2. Make Court application to Liquidate
3. Follow dissolution procedure, giving creditors the opportunity to do 2) above
5. Do nothing - which might result in:
a) Creditors may look to Liquidate the Company
b) C House will ultimately look to strike/dissolve Company (creditors can then object to strike off and look to do 2) above.

If you do 3) yourself you will soon find out whether creditors are going to Liquidate or object. to the dissolution If neither happens hey presto your Company will be dissolved.

 

[Bosch]

Hi everyone,

Since my company doesn't have enough funds to pay an IP I've opted to follow Spongebob plan but I fail to understand Step 5: Winding Up. Is this a step that my company would eventually face? Is Lisa's Company's option 3. Follow dissolution procedure same as Spongebob plan?

Feeling puzzled since for what Scalloway said:

If you don't apply for strike off you can potentially be taken to court for failing to file accounts and end up with a criminal record. Companies House and HMRC will continue to to pursue you.

Lisa's Company's option 5, appears to contradict Scalloway's statement or what exactly means do nothing?

5. Do nothing - which might result in:
a) Creditors may look to Liquidate the Company
b) C House will ultimately look to strike/dissolve Company (creditors can then object to strike off and look to do 2) above.

Wouldn't this get me into trouble easily? From Scalloway quote above I get that strike off is a must and cost £10.

Please give me some light

Thank you very much

 

[StevensOnln1]

Your company would only face winding up if a creditor applied to the courts for a winding up order. This is extremely unlikely in your case.

 

[Bosch]

Thanks StevensOnIn1.

I got it now. What about striking off; is it a step I should take or should I do anything as in Lisa's answer?

5. Do nothing - which might result in:
a) Creditors may look to Liquidate the Company
b) C House will ultimately look to strike/dissolve Company (creditors can then object to strike off and look to do 2) above.

Thank you

 

[StevensOnln1]

Applying for strike off is the quickest and easiest way to put the whole thing to bed.

 

[Lisa Thomas]

Striking off is the same as dissolution - just different terminology.

 

[Lisa Thomas]

Hi everyone,

Since my company doesn't have enough funds to pay an IP I've opted to follow Spongebob plan but I fail to understand Step 5: Winding Up. Is this a step that my company would eventually face? Is Lisa's Company's option 3. Follow dissolution procedure same as Spongebob plan?

Winding Up is the same as Liquidation - just different terminology.

My Company is option 1, but probably not relevant in your case.

These were NOT steps. They were alternative outcomes/options.

Point 5 was what could happen if you choose to do absolutely nothing.

Sorry if that was not clear.

 

[Bosch]

Thank you everyone. It seems to me that Striking off will be the solution fit to my company.
But do I need first to stop the direct debits; close the company's bank accounts and send letters (as in Spongebob plan) to creditors before Striking off?

 

[Lisa Thomas]

Yes you need to follow the procedure in full.

https://www.gov.uk/government/publi...on/strike-off-dissolution-and-restoration-gp4