Liquidation

[wshouse]

Have ceased trading and need advice on next steps,
getting in debts and dealing with contract excuses,
creditors meeting,
liquidation,
bank personal guarantees,
IP fees

any experiences good or bad would be welcome

 

[Method Man]

You'll need around £6k + VAT to fund a Creditors' Voluntary Liquidation

 

[dtl04]

Speak to your bank, especially if there is bank debt.

 

[Method Man]

Get your debts collected in as much as possible before liquidation.

Liquidation is Christmas come early for people who owe you money.

 

[dtl04]

Sorry for the rather brief response above... I wouldn't worry about having to find the pre-appointment fee as this can be waivered by an IP if they deal with the actual liquidation.

Defo speak to your bank though or any other secured creditors your company has. If there is bank debt ask to speak to the business support/corporate insolvency unit, who will be able to assist here and put you in touch with an IP.

If you give me more info (turnover, debt level, assets, type of business), I can provide a lot more information here; I work in corporate insolvency for a Big 4 accountancy firm.

 

[dtl04]

Get your debts collected in as much as possible before liquidation.

Liquidation is Christmas come early for people who owe you money.

No, not neccessarily, as any IP will look to recover the remaining debtor ledger asap. It's the first rule of insolvency - collect and protect the assets. It's no easy ride for a debtor of an insolvent company, trust me. Nearly every accountancy firm has a debt recovery unit (and a law firm) that know every trick there is in the book of how people will try not to pay a debt just because the Company has entered insolvency.

 

[Method Man]

Sorry for the rather brief response above... I wouldn't worry about having to find the pre-appointment fee as this can be waivered by an IP if they deal with the actual liquidation.

Defo speak to your bank though or any other secured creditors your company has. If there is bank debt ask to speak to the business support/corporate insolvency unit, who will be able to assist here and put you in touch with an IP.

If you give me more info (turnover, debt level, assets, type of business), I can provide a lot more information here; I work in corporate insolvency for a Big 4 accountancy firm.

Aaah the rarified atmosphere of the Big 4.

 

[Method Man]

No, not neccessarily, as any IP will look to recover the remaining debtor ledger asap. It's the first rule of insolvency - collect and protect the assets. It's no easy ride for a debtor of an insolvent company, trust me. Nearly every accountancy firm has a debt recovery unit (and a law firm) that know every trick there is in the book of how people will try not to pay a debt just because the Company has entered insolvency.

Yes it bl--dy is.

@ OP get as much of your debtor ledger in before liquidation before the solicitors and debt collection firms start taking their cut from it.

 

[Spongebob]

Have ceased trading and need advice on next steps,
getting in debts and dealing with contract excuses,
creditors meeting,
liquidation,
bank personal guarantees,
IP fees

any experiences good or bad would be welcome

Whether or not you should get an IP involved to liquidate the company depends largely on the value of the company's assets. These will include stock, business equipment, and debtors. If the book value of these assets exceeds £50k then my advice would be to appoint an IP without delay and let them deal with everything apart from the bank guarantees which you will have sort out yourself. The IP will deduct their fees from the monies realised from the liquidation of the assets.

However, there is absolutely no legal requirement to appoint a liquidator. You have fulfilled your duties as director of a company finding itself to be insolvent simply by ceasing to trade. The ball is now in the court of the company's creditors.

Your biggest single problem is almost certainly the personal guarantee given to the bank. However, you also mention debtors. As others have said, your main efforts should be concentrated on collecting every penny you can from debtors and reducing the bank overdraft. Use every ounce of personal goodwill you have with your customers and offer generous settlement discounts if neccessary - just get the money in!

The advantage of this approach rather than appointing an Insolvency Practitioner is that all monies collected go straight into the company's bank account and so reduce your exposure under your guarantee. An IP would put these monies in a seperate account for distribution amongst all creditors, so your exposure to the bank would remain.

Technically, following my advice could be construed as preferring the bank over other creditors and bettering your personal position; however, if you collect a cheque off a customer made out to the company in respect of a debt owed to the company, what else are you supposed to do with it other than pay it into the company bank account? Although no longer trading, the company still exists and has an active bank account; no insolvency proceedings have been initiated and therefore you have a very good argument that your actions are reasonable. In any case, the potential rewards greatly outweigh any potential sanction that may be brought to bear on you. At worst you would be back in the same position regarding the guarantee as you are now!

Creditors should be informed of the situation, and in virtually all cases will go away, never to be heard from again. This letter usually does the trick;

On receipt of this letter, very few creditors will want to spend money chasing a debt which will never be paid and most will simply write it off. The exception is HMRC, who will chase the company through the courts, resulting ultimately in it being wound up. This will take many months however, giving you plenty of time to collect the company's debts.

You make no mention of business premises or equipment/stock. If you rent premises you need to move out now. Landlords are notoriously viscious when tenants default and tend to send bailliffs in immediately to distrain on all assets. Move everything to a place of safe keeping before he gets wind of what's going on.

If you are intending starting again under a Phoenix company these assets will help you get under way. There is the possibility of course, that a future liquidator in the shape of the Official Receiver may ask questions about what happened to the assets, but in my experience they are easily fobbed off and they will not press the case for the sake of a couple of desks and an old PC (or even a full factory of woodworking machinery!) Even if you have to buy said assets from the OR, it will be a year or so down the line and at a price well below 'market value'.

If you need any more detailed advice, please get in touch.

Good luck.

Bob

 

[wshouse]

Thanks bob
I have or am pretty much doing what you suggest, our debtors / assets are in excess of 1.4 m therefore we have appointed an IP who takes over 27 march

Our main issue is getting bank of our back prior to that appointment.
They are chasing pgs at moment via an initial standard letter to which i have replied asking for time for funds to be collected

 

[Method Man]

Thanks bob
I have or am pretty much doing what you suggest, our debtors / assets are in excess of 1.4 m therefore we have appointed an IP who takes over 27 march

Our main issue is getting bank of our back prior to that appointment.
They are chasing pgs at moment via an initial standard letter to which i have replied asking for time for funds to be collected

Keep an eye on the IP's fees chap.

A £1.4m case is Christmas come early for them.

Don't be surprised if their "remuneration" is > £100,000.

That'll make a big dent in what are called "floating charge assets/realisations" which, if your bank has standard debenture security, will be the pot from which the bank will be paid. Frustratingly for many a guarantor, the IP also takes their fees from that same pot.

If your debts were factored and you have guaranteed the factoring agreement, the common form of guarantee enables the factoring company to realise its security in any order it deems fit i.e. they can go straight to the guarantors even if the factored book debts exceed the amount they are owed. They don't even have to be that active in pursuing the debtors and they have very little (if any at all) duty of care to mitigate their claim.

Sorry it's all a bit of a bleak picture but at least you know what to look out for.

 

[wshouse]

This is approaching and although I know we have conducted ourselves correctly and have had close professional advice from solicitors, accountants and lately IPs I am curious as to what to expect?
also is it likely that our existing IPs could be replaced? and if so can this be contested?

 

[SamStones]

A close personal friend of mine has been to these on both sides of the table. He would say to expect questions about what you did to try and save the company and how it went wrong. Keep it brief though unless pressed. In the case of his business going under he owed 500k and not one person turned up to the creditors meeting so it may even be a non-event!

Good luck.

 

[Alan R Price]

This is approaching and although I know we have conducted ourselves correctly and have had close professional advice from solicitors, accountants and lately IPs I am curious as to what to expect?
also is it likely that our existing IPs could be replaced? and if so can this be contested?

It's a shame you didn't come to me for advice .

There will be a creditors' meeting at which you will nominally be the chairman, although your proposed IP will conduct proceedings on your behalf. He will present your director's report and statemetn of affairs to the creditors present, who will be entitled to question you and the IP (about the advice he has given you). The IP will protect you from unfair or unreasonable questioning - just be honest and don't flannel if you don't know the answer. There will then be a vote on who is going to be liquidator - it is the value of creditors' claims that determines their voting power; and in 99% of cases your nominee will end up keeping the job, although creditors could vote an alternative liquidator in.

The liquidator's role includes investigating the company's affairs to see if the directors have been guilty of misconduct and in all cases he must submit a "conduct report" to the BIS recommending whether or not the directors should be banned. He can also bring actions personally against directors if they have been up to mischief. You will have a duty to cooperate fully with the liquidator and to provide all information and documentation he may reasonably request.

 

[wshouse]

well both companies have now enetered liquidation and both have had creditors meetings, bank personal guarantees have been met, both pref.payments and liquidators fees appear to be covered, approx to date £300k has been collected out of £1.1m.

What now?