Liquidation, selling, options?

[doggone]

I am not great at being to the point but will try.

I only came across this forum when I looked up National Company Rescue and I have seen reference to Spongebob plan too but have no idea??

We have been in business about 16 years and LTD for 13, had some good times in the past but as an online retailer things have changed. The beast that is Amazon and most brands are getting better at selling online, this Christmas was not helped by postal strikes causing a backlog in all delivery carriers.

So, have enough in our overdraft to pay couriers in a few days and rent and rates on 1st Jan but I anticipate a higher courier bill in January, usual expenses and vat will not be covered by sales in January. We have a bounce back and overdraft.
We have over the years put money into the business and have money due from when we went LTD I have no real expectations we will see that again. What I am concerned about is we have put some money in a couple of months ago to help with cash flow and can't bear the thought of not getting that back. There are still a couple of weeks of trading this year, what I am wondering is if I have effectively paid what will go out in DD by 1st Jan could I max out the overdraft to pay myself back then look at going into liquidation in January?
Will that get me into trouble, the business owes me loads and this is only the money put in 2-3 months ago.

I know I cannot meet my new January debts and invoices due at the end of December.

What is the best and cheapest solution?
I could cancel the DD for the rent 1st Jan but they have already given us 2 months grace which was added onto the next 4 months so not sure that feels comfortable.

TBH I am not comfortable with it at all, I have only just got my head around the fact I will owe our suppliers something rather than originally planning on paying them and just leaving the big ones such as VAT, couriers and rent. We have 2 employees, one who has been with us 10 years!

National Company Rescue suggest they buy your company debts albeit you pay them a fee but we would not have the money to make our employees redundant but they say we keep assets and any funds in bank (none) how would that work for our warehouse and stock, we have about £60k of stock.

What is Spongebob plan?

I know it's a big ask but hoping someone could advise the best way to do this with minimal hurt and possibly quickly

 

[bovine]

Dont take out the money to pay yourself, that would be an illegal preference. Its probably not a good idea to pay anything at the moment but you should take professional advice. Some will be along soon!

Spongebob can work, but your staff would not get redundancy/find it difficult to claim. Again take professional advice now. Avoid the other option you mentioned.

Edited to add- with 60k of stock, definitely dont spongebob

 

[Frank Wessely]

I am not great at being to the point but will try.

I only came across this forum when I looked up National Company Rescue and I have seen reference to Spongebob plan too but have no idea??

We have been in business about 16 years and LTD for 13, had some good times in the past but as an online retailer things have changed. The beast that is Amazon and most brands are getting better at selling online, this Christmas was not helped by postal strikes causing a backlog in all delivery carriers.

So, have enough in our overdraft to pay couriers in a few days and rent and rates on 1st Jan but I anticipate a higher courier bill in January, usual expenses and vat will not be covered by sales in January. We have a bounce back and overdraft.
We have over the years put money into the business and have money due from when we went LTD I have no real expectations we will see that again. What I am concerned about is we have put some money in a couple of months ago to help with cash flow and can't bear the thought of not getting that back. There are still a couple of weeks of trading this year, what I am wondering is if I have effectively paid what will go out in DD by 1st Jan could I max out the overdraft to pay myself back then look at going into liquidation in January?
Will that get me into trouble, the business owes me loads and this is only the money put in 2-3 months ago.

I know I cannot meet my new January debts and invoices due at the end of December.

What is the best and cheapest solution?
I could cancel the DD for the rent 1st Jan but they have already given us 2 months grace which was added onto the next 4 months so not sure that feels comfortable.

TBH I am not comfortable with it at all, I have only just got my head around the fact I will owe our suppliers something rather than originally planning on paying them and just leaving the big ones such as VAT, couriers and rent. We have 2 employees, one who has been with us 10 years!

National Company Rescue suggest they buy your company debts albeit you pay them a fee but we would not have the money to make our employees redundant but they say we keep assets and any funds in bank (none) how would that work for our warehouse and stock, we have about £60k of stock.

What is Spongebob plan?

I know it's a big ask but hoping someone could advise the best way to do this with minimal hurt and possibly quickly

Hi Doggone

It is always simpler with the benefit of hindsight but I think that you should have taken advice from an Insolvency Practitioner 2-3 months ago at the time you were considering making that cash injection. Not to say that it was the wrong thing to do but the benefit of having an experienced and objective pair of eyes looking at your options, how they might turn out and what your Plans B, C etc could be would have been beneficial.

Where you are now is that based on the brief narrative, the company is insolvent and the interests of creditors take priority over those of the shareholders. Treating creditors equally as far as possible and without preference is important else in the event of an insolvency procedure this could come back to bite you. Therefore "maxing the overdraft" for your personal benefit is not something I could recommend. It will be a big red flag to an IP.

There is too much going on to be able to say specifically here which payments should be made or cancelled. Cancelling the rent DD without warning will antagonise the landlord and jeopardise whatever goodwill remains. Maintaining a dialogue is vital. Of course I do not know the background; is there a rent deposit or is the rent personally guaranteed?

The important things have to be structured around your broader concerns and objectives. I get the impression that there could be some further negotiated "stretch" in the amounts due to creditors to gain breathing space whilst you decide on your best option.

The Sponge Bob Plan is aimed at companies which have ceased to trade, have no assets to pay for a liquidation, no or minimal debts, no further use and the Board/owners want to strike them off the register. I don't think that applies to your business.

It is not too late. With the benefit of a prudent / robust short term cashflow forecast it will be possible to quickly consider your options. You are welcome to give me a call to explore matters further. There are also other IPs in the forum. Initial calls / meetings are usually without charge or obligation.

I hope that this helps.

Thanks.

 

[japancool]

National Company Rescue suggest they buy your company debts albeit you pay them a fee but we would not have the money to make our employees redundant but they say we keep assets and any funds in bank (none) how would that work for our warehouse and stock, we have about £60k of stock.

I've heard this promise, and it doesn't fly.

Read this thread:

Has anyone hear of this company and are they legit?

Hi. Has anyone ever heard of had dealings with this company? National company rescue / atherton corporate They basically buy the shares in a business taking on all liabilities etc allowing you to walk away. If i went through a route like this would there be any risks to myself? Im guessing to...

www.ukbusinessforums.co.uk

And this:

Who Are National Company Rescue and Atherton Corporate?

National Company Rescue are offering a solution to your issues by offering to buy your insolvent company. There may be a catch.

www.companyrescue.co.uk

 

[Lisa Thomas]

Best to speak to a licensed Insolvency Practitioner about options.

It might be too late for a CVCA so you are probably looking at exploring the two types of insolvent liquidation.

As Frank has advised - dissolution won't apply here as it seems the company can afford liquidation, unless all the stock is covered by ROT (retention of title) terms by suppliers.

I imagine this is all very stressful but this is all the more reason why you should speak to someone who can cut through the noise and advise on the right route. You should then feel some relief.

I'd be happy to chat with you, if you would like a second opinion.

 

[Elliot Green]

If in your capacity as a creditor of your company you now enter into a transaction that puts *you* into a better position in comparison with other creditors, then the risk you may run is that of what is called a Preference under Section 239 of the Insolvency Act 1986. There are instances when a Director might be able to argue they have not preferred themselves ahead of other creditors. However, that position is all the more challenging to do so when the suggested transaction that Frank rightly refers to as a potential red flag, arises close to the point at which liquidation is triggered. It, therefore, appears in your case that taking advice from an Insolvency Practitioner would be merited so that the precise facts of your case can be properly and fully considered.