Ltd company to fold but owing utility bill

[sparksy68]

Hi all, out Ltd company ( pub/restaurant) is going to close soon due to rent/ overheads not making it viable anymore. We owe our our Landlord quite a bit of rent after a year of struggling with lower footfall and higher energy bills ect. We have agreed to leave any assets to him towards rent arrears ( which I think he is entitled to seize anyway if he wanted) he will be left with a ready made restaurant and our customer base and has offered us a job as chefs. We owe a large utility bill after a year of horrific price increases in 2023.
From what I can see we can't ask for a strike off because of this. We can't pay a liquidator as we don't have the funds so my question is what's the best course of action ?

 

[ChrisCallaghan]

Hi,

You can certainly attempt to strike off, which creditors have a right to object to, and invite them to wind up your company (aka compulsory liquidation), if you feel you cannot presently afford a liquidators fee. The below template letter from a charity will assist you with this:

Considering strike off | Sample letter | Business Debtline

Use this letter to tell your creditors and members of your limited company that you are considering strike off.

www.businessdebtline.org

We can't pay a liquidator as we don't have the funds

If you don't mind my asking, what amounts have you been quoted? How much is to total owed to the utility company?

 

[IanSuth]

TUPE
This is something for you personally to think about having been there and done it.

If you stay on working in a similar business in the same premises but now as staff rather than owners it is likely your employment rights will carry over from your business to his. Definitely did in my case (and we had even moved to new owners office just doing most of the same business).

That means things like continuity of service carry over and if you are ever made redundant in future that matters, plus of course the 2 year rule for employment protections will have started counting from when you started the business not when you go to work for him.

 

[sparksy68]

Hi,

You can certainly attempt to strike off, which creditors have a right to object to, and invite them to wind up your company (aka compulsory liquidation), if you feel you cannot presently afford a liquidators fee. The below template letter from a charity will assist you



If you don't mind my asking, what amounts have you been quoted? How much is to total owed to the utility company?

Hi thanks for the reply one company asked for around 4k another 6k to liquidate but will have no assets anyway

 

[NickGrogan]

Which energy supplier? Take a look at the contract you signed. Some include directors personal guarantee, so if the company can't pay, you may be personally liable.

Did you submit actual meter readings to the energy supplier and have you completed a change of tenancy so that the business is no longer liable for the electricity being used?

 

[ChrisCallaghan]

Hi thanks for the reply one company asked for around 4k another 6k to liquidate but will have no assets anyway

Both sounds like reasonable quotes to be fair. I may be able to offer a slightly lower quote. If that would be of interest, please message me directly.

Otherwise then using the template letter in the link I've provided is likely your best option.

 

[sparksy68]

Which energy supplier? Take a look at the contract you signed. Some include directors personal guarantee, so if the company can't pay, you may be personally liable.

Did you submit actual meter readings to the energy supplier and have you completed a change of tenancy so that the business is no longer liable for the electricity being used?

Hi thanks for the reply, we're not personally responsible for it and we did have a 3 month period were our meter died and I think the bills were over estimated but we will still be left with an outstanding balance

 

[NickGrogan]

Glad to hear it. If the COT is completed then should get a final bill, which you can either arrange to pay or treat as another debt when you close the company.

 

[Lisa Thomas]

It sounds like the company might have had assets to pay for insolvency at one point but the company gave them away, in preference, to the landlord.

This may have been illegal.

How much were the assets worth?

Did any of the directors personally guarantee the lease?

 

[sparksy68]

It sounds like the company might have had assets to pay for insolvency at one point but the company gave them away, in preference, to the landlord.

This may have been illegal.

How much were the assets worth?

Did any of the directors personally guarantee the lease?

Hi no personal guarantee and the landlord is owed rent that all of the assets won't cover. I think he is in his right to seize them anyway because of rent owed. I would estimate assets to be worth around 3k if it went to auction at best.

 

[Lisa Thomas]

The landlord may well have the right to seize the assets but have they actually started the distraint procedure formally?

They are not the only creditor here - you state the utility company is owed money so it sounds to me that you are preferring the landlord over the utility company. Are there any other creditors? HMRC for example?

If you sold those assets, you would probably have enough to pay to liquidate the company and wind it down in a controlled manner.

Regardless, the directors should be taking professional advice before making these decisions to give assets away.

It's highly unlikely to happen in this case based on your scenario, and probably too small to pursue in any event, but as an example to other readers of this post, if the utility company (or another creditor) put the company into liquidation themselves, the directors could be pursued personally by the liquidator for an illegal preference, here.

 

[sparksy68]

The landlord may well have the right to seize the assets but have they actually started the distraint procedure formally?

They are not the only creditor here - you state the utility company is owed money so it sounds to me that you are preferring the landlord over the utility company. Are there any other creditors? HMRC for example?

If you sold those assets, you would probably have enough to pay to liquidate the company and wind it down in a controlled manner.

Regardless, the directors should be taking professional advice before making these decisions to give assets away.

It's highly unlikely to happen in this case based on your scenario, and probably too small to pursue in any event, but as an example to other readers of this post, if the utility company (or another creditor) put the company into liquidation themselves, the directors could be pursued personally by the liquidator for an illegal preference, here.

So of the company sold its assets ( which isn't enough to cover the cost to liquidate or pay the owed rent ) to the landlord rather than passing them on would that be a better procedure? Looking on the HMRC website it says that selling assets to cover costs is an option?

 

[Lisa Thomas]

The company can sell it's assets to cover the costs of insolvency. However Directors should take care the sale is at market value (ideally based on a professional valuation sop it can stand up to any scrutiny) and the assets are physically paid for.

A compulsory liquidation in the court costs £2,900 hence why I said you may have enough to cover liquidation.

 

[sparksy68]

The company can sell it's assets to cover the costs of insolvency. However Directors should take care the sale is at market value (ideally based on a professional valuation sop it can stand up to any scrutiny) and the assets are physically paid for.

A compulsory liquidation in the court costs £2,900 hence why I said you may have enough to cover liquidation.

Who pays if it's a forced liquidation ?

 

[Lisa Thomas]

Who pays if it's a forced liquidation ?

The creditor/s. Common protagonist is HMRC.