My Business Has Failed and I Don't Know What To Do?

[Jojo210]

Hi there.

My Limited Company has loads of problems and I just don't know where to turn.

I took a bounce back loan during covid. Unfortunately 3-4 months after taking the loan my younger sister died unexpectedly and since then I've been severely depressed. The business which was doing really well now makes pretty much nothing. I did spend all of the loan on the business. I have got one regular client paying me £1500 a month for consultancy work. After paying accountancy fees and other business fees I come out with about £1000 a month which is my only source of income.

The bank have appointed a solicitor to chase me for the BBL (£45k). They have given me until the end of the week to answer them. I owe HMRC money too for VAT and PAYE, I have spoken to HMRC to explain my situation and they have said they will be back in touch.

I have just been sent a court email as I owe a small company £750 and they are now pursuing me through the small claims court. I also have a few other companies chasing me for money.

I have absolutely no assets and personally have debts of £140k which I can't pay. I have lost everything including my home.

I can't afford to pay £4-5k for liquidation I just don't have the money.

Would the Spongebob plan work for me?

Thanks for any help in advance.

 

[ChrisCallaghan]

Hello @Jojo210

Firstly I'm sorry to hear about your sister and the hard times that have followed.

I can't afford to pay £4-5k for liquidation I just don't have the money.

Would the Spongebob plan work for me?

It is worth bearing in mind that the Spongebob plan was written before the pandemic and BBLs. The principles haven't changed, and the guide is still relevant today for people like yourself who cannot afford a liquidators fee.

Things to note when considering the Spongebob plan with a BBL:

• The BBL lender will object to any strike off/dissolution action (regardless of whether it is a voluntary application via DS01 or initiated by Companies House due to non-filing)
• Though a BBL lender will object to strike off, they WON'T come forward to wind up the company, aka compulsory liquidation.
• BBL lenders will EVENTUALLY cease objecting to strike off/dissolution, and the company will go. Typically I'm seeing it take 18 - 24 months. Please be aware that during this time the company still exits, and you will receive the odd collection letter and phone call, but thankfully BBL lenders (or any agents they instruct) are prohibited from any doorstep collection activities, i.e. bailiffs.

In summary, Spongebob plan can work in your scenario. It will just take quite a while.

 

[Gavin Bates]

Hi

Like Chris, I am sorry to hear about your situation. Chris has fairly summarised the position with the SpongeBob plan but i thought it would be useful for you to hear it from two different people.

Best Wishes

Gavin

 

[Jojo210]

Hello @Jojo210

Firstly I'm sorry to hear about your sister and the hard times that have followed.



It is worth bearing in mind that the Spongebob plan was written before the pandemic and BBLs. The principles haven't changed, and the guide is still relevant today for people like yourself who cannot afford a liquidators fee.

Things to note when considering the Spongebob plan with a BBL:

• The BBL lender will object to any strike off/dissolution action (regardless of whether it is a voluntary application via DS01 or initiated by Companies House due to non-filing)
• Though a BBL lender will object to strike off, they WON'T come forward to wind up the company, aka compulsory liquidation.
• BBL lenders will EVENTUALLY cease objecting to strike off/dissolution, and the company will go. Typically I'm seeing it take 18 - 24 months. Please be aware that during this time the company still exits, and you will receive the odd collection letter and phone call, but thankfully BBL lenders (or any agents they instruct) are prohibited from any doorstep collection activities, i.e. bailiffs.

In summary, Spongebob plan can work in your scenario. It will just take quite a while.

Hi Chris

Thank you for taking the time to answer. Do you think I should stop filing? My accountants are pretty useless, they do my returns on time, but have failed to give me management accounts over the past two years, which also lead to me failing as I didn't know how much money I was or wasn't making. I want to stop employing the accountants as it's just more costs I can't afford.

Thankfully I don't have anywhere for bailiffs to visit anyway I've lost everything so there's nothing for them to take.

I'll get on with the process starting on the 1st April. Thanks for your help.

 

[Jojo210]

Hi

Like Chris, I am sorry to hear about your situation. Chris has fairly summarised the position with the SpongeBob plan but i thought it would be useful for you to hear it from two different people.

Best Wishes

Gavin

That's great thanks for taking the time advise me

 

[ChrisCallaghan]

Hi Chris

Thank you for taking the time to answer. Do you think I should stop filing? My accountants are pretty useless, they do my returns on time, but have failed to give me management accounts over the past two years, which also lead to me failing as I didn't know how much money I was or wasn't making. I want to stop employing the accountants as it's just more costs I can't afford.

Thankfully I don't have anywhere for bailiffs to visit anyway I've lost everything so there's nothing for them to take.

I'll get on with the process starting on the 1st April. Thanks for your help.

If there are no funds left in the company to pay for an accountant, then there is no obligation on you to personally pay for an accountant.

 

[Ian J]

My accountants are pretty useless, they do my returns on time, but have failed to give me management accounts over the past two years, which also lead to me failing as I didn't know how much money I was or wasn't making.

Was it part of your contract with them for them to produce management accounts for you?

 

[DontAsk]

Usual question, does the company owe anything for which you have given a personal guarantee?

If not, the debts die with the company, unless you are proven to have commited a crime.

 

[MBE2017]

Further to the above, all I would add is after your sisters death and totally understandable depression, ensure you see and avail yourself of any help that can be offered.

Losing your sister, home and business would be enough to cause anyone depression, there is no shame in seeking help. Most importantly it will help put things in perspective and help you move forward.

 

[Jojo210]

Usual question, does the company owe anything for which you have given a personal guarantee?

If not, the debts die with the company, unless you are proven to have commited a crime.

No there were no personal guarantees. Oh god I hope I haven't committed any crimes, it's stressful enough having to go through losing my business without having to think I've committed any crimes

 

[Jojo210]

Further to the above, all I would add is after your sisters death and totally understandable depression, ensure you see and avail yourself of any help that can be offered.

Losing your sister, home and business would be enough to cause anyone depression, there is no shame in seeking help. Most importantly it will help put things in perspective and help you move forward.

Thank you for your kind words, yes it's been a very tough two years. I also had to get rid of my warehouse and all my employees. Hopefully things will get better soon

 

[Jojo210]

Was it part of your contract with them for them to produce management accounts for you?

I'm not sure, they do my bookkeeping and I asked them on numerous occasions to give me management accounts, but nothing ever surfaced.

 

[Lisa Thomas]

So sorry to hear about your loss, Jojo210.

There is no requirement for you to pay personally to submit the accounts and in any event, not doing so might encourage Companies House to strike the company off for non filing so may actually help speed up the end process you are trying to achieve.

Here is the link for the dissolution procedure:

Guidance for limited companies, partnerships and other company types

Guidance about registering, filing and disclosing information with Companies House.

www.gov.uk

 

[Jojo210]

Thanks Lisa OK that's good to know, I'll just leave it then. Do you know what happens about VAT? Do I just not do the returns either?

 

[Lisa Thomas]

If you are able to do the returns yourself then you might as well file them so HMRC's records are up to date. But if that requires payment to a third party and excessive time spent then there is little point in arranging it imo.

The other IP's may have different views though.

 

[MikeJ]

No there were no personal guarantees. Oh god I hope I haven't committed any crimes, it's stressful enough having to go through losing my business without having to think I've committed any crimes

Unless you're aware of committing any crimes, don't worry about it. Let the company fold, concentrate on getting your life back together.

 

[Jojo210]

If you are able to do the returns yourself then you might as well file them so HMRC's records are up to date. But if that requires payment to a third party and excessive time spent then there is little point in arranging it imo.

The other IP's may have different views though.

That's great thanks Lisa.

 

[Jojo210]

Unless you're aware of committing any crimes, don't worry about it. Let the company fold, concentrate on getting your life back together.

Not that I'm aware of. Thanks for your help

 

[T'Mighty Tcake]

Dear Jojo

Please know that you are not alone in this horrible situation. I know how worrying it is having business debt and creditors chasing you.

My business too, is also failing and it looks like I will closing down my business. I spoke to business debt helpline earlier today and they were absolutely fantastic and gave me so much reassurance. They suggested striking the company off too, as I cannot afford liquidation. Please do give them a call. they went through everything with me, and options available and exactly what the process is and even emailed me sample letters to send to HMRC and Santander.

Do give them a call, if you can.

 

[Callum97]

Dear Jojo

Please know that you are not alone in this horrible situation. I know how worrying it is having business debt and creditors chasing you.

My business too, is also failing and it looks like I will closing down my business. I spoke to business debt helpline earlier today and they were absolutely fantastic and gave me so much reassurance. They suggested striking the company off too, as I cannot afford liquidation. Please do give them a call. they went through everything with me, and options available and exactly what the process is and even emailed me sample letters to send to HMRC and Santander.

Do give them a call, if you can.

So many companies closing its scary

 

[JEREMY HAWKE]

They way I see it .
What exactly have you got to lose .There is nothing to be scared of anymore because it looks like it has already happened to you.

If you just did nothing at all nobody would blame you under the circumstances as clearly pointed out Bobs plan is slightly outdated but it does apply to you and it was made for people like you . If you really wanted to do anything then it would be good to implement the plan.

If you have nothing left and owe 140K personally you would be in a good position for personal bankruptcy and it would be advantageous to gain advice on this .
You have been in the trenches and you need to focus on yourself personally

 

[Jojo210]

Dear Jojo

Please know that you are not alone in this horrible situation. I know how worrying it is having business debt and creditors chasing you.

My business too, is also failing and it looks like I will closing down my business. I spoke to business debt helpline earlier today and they were absolutely fantastic and gave me so much reassurance. They suggested striking the company off too, as I cannot afford liquidation. Please do give them a call. they went through everything with me, and options available and exactly what the process is and even emailed me sample letters to send to HMRC and Santander.

Do give them a call, if you can.

Hi there

Oh I know so many companies are in the same situation. My business was flying and now I've lost everything, not a great place to be.

Sorry to hear your business is failing too. I did speak to the business debtline a couple of months ago, they arranged an appointment for me to speak to an advisor, but unfortunately I've moved abroad, so they didn't call me as my number had an international dial tone (it's a UK number). I did try to call them on Monday but waited on the line for ages and didn't get through. I think I'll keep trying. I have spoken to HMRC and given them my new address in Spain. However, I don't currently have an income, so I'm not sure how they will deal with me.

Good luck with your business, I hope it all turns out well for you

 

[Jojo210]

So many companies closing its scary

Yes it is.

 

[Jojo210]

They way I see it .
What exactly have you got to lose .There is nothing to be scared of anymore because it looks like it has already happened to you.

If you just did nothing at all nobody would blame you under the circumstances as clearly pointed out Bobs plan is slightly outdated but it does apply to you and it was made for people like you . If you really wanted to do anything then it would be good to implement the plan.

If you have nothing left and owe 140K personally you would be in a good position for personal bankruptcy and it would be advantageous to gain advice on this .
You have been in the trenches and you need to focus on yourself personally

Thanks Jeremy, I've lost everything so all I've got now is my sanity and that's decreasing rapidly!

I'll give Bob's plan a try and see how it goes.

As for the personal debt that's the next one to tackle, I never thought I'd go bankrupt but it's looking like that's how it's going to be

 

[The Byre]

I've moved abroad, so they didn't call me as my number had an international dial tone (it's a UK number).

That's it then - your creditors (bank, HMRC, etc.) will only go after the low-hanging fruit. Once they realise that you are conspicuous by your absence, they will just give up and go and bother someone else. Don't tell them where you are (tip - they don't really want to know!)

So many companies closing its scary

That's how it starts - in ones and twos and then a six-pack at a time. After that, people just give up and throw the towel in and tens of thousands of companies will just stop trading without bothering with the formalities.

 

[Jojo210]

That's it then - your creditors (bank, HMRC, etc.) will only go after the low-hanging fruit. Once they realise that you are conspicuous by your absence, they will just give up and go and bother someone else. Don't tell them where you are (tip - they don't really want to know!)

That's how it starts - in ones and twos and then a six-pack at a time. After that, people just give up and throw the towel in and tens of thousands of companies will just stop trading without bothering with the formalities.

Damn I already gave HMRC my address in Spain. I gave them the block but not the apartment number! Oh that's good to know anyway.

Yes it's so sad so many businesses going down the pan

 

[Lisa Thomas]

Thanks Jeremy, I've lost everything so all I've got now is my sanity and that's decreasing rapidly!

I'll give Bob's plan a try and see how it goes.

As for the personal debt that's the next one to tackle, I never thought I'd go bankrupt but it's looking like that's how it's going to be

Please make sure you explore all options to ensure Bankruptcy is the best route for you. There are lots more options out there, which may help you avoid Bankruptcy.

 

[The Byre]

Don't worry! Getting a judgment enforced across UK-to-EU borders is stupidly difficult since Brexit - it was not that easy before, but now the processes are horrendous! But I can only speak for getting a German judgment enforced in the UK - it was hard before and close to impossible now. One top German law firm called the situation for litigants a nightmare and I'll take their word for it!

There used to be a beast known as European Enforcement Orders, but post-Brexit judgments given in proceedings commenced after 31 December 2020, those rules no longer apply. I am not aware of any replacement arrangements and this UK government has done close to nothing about anything in the six years they had to organise themselves for leaving the EU.

That now means that each State will determine the enforceability of the United Kingdom's judgments in its own territory in accordance with its own rules, which in Spain, in the absence of a convention binding it to the United Kingdom in this matter, leads to the application of Arts. 41 et seq. of the International Legal Cooperation in Civil Matters Act (LCJI).

That would entail hiring a Spanish lawyer and initiating litigation in Spain - they ain't gonna do that for a BBL (IMO).

Normally, my advice would be for you to ensure that you personally are not in default of any debts. In an ideal world, just the company should be in default. But as you have debts of £140k, a personal bankruptcy is called for. That way, the debt is written off and it will not come back to bite you (with interest!) if you ever return to the UK.

There is a ridiculous amount of misinformation online about leaving the UK with outstanding debt. All sorts of dire consequences are cited, most of which are either rubbish or just theoretical as it requires the plaintiff to go to enormous effort and expense.

My 30 cents worth - have a few glasses of red and enjoy the Spanish nightlife, followed by a good night's sleep. In vino veritas et in vino pax!

 

[Jojo210]

Please make sure you explore all options to ensure Bankruptcy is the best route for you. There are lots more options out there, which may help you avoid Bankruptcy.

Thank you Lisa

 

[Jojo210]

Don't worry! Getting a judgment enforced across UK-to-EU borders is stupidly difficult since Brexit - it was not that easy before, but now the processes are horrendous! But I can only speak for getting a German judgment enforced in the UK - it was hard before and close to impossible now. One top German law firm called the situation for litigants a nightmare and I'll take their word for it!

There used to be a beast known as European Enforcement Orders, but post-Brexit judgments given in proceedings commenced after 31 December 2020, those rules no longer apply. I am not aware of any replacement arrangements and this UK government has done close to nothing about anything in the six years they had to organise themselves for leaving the EU.

That now means that each State will determine the enforceability of the United Kingdom's judgments in its own territory in accordance with its own rules, which in Spain, in the absence of a convention binding it to the United Kingdom in this matter, leads to the application of Arts. 41 et seq. of the International Legal Cooperation in Civil Matters Act (LCJI).

That would entail hiring a Spanish lawyer and initiating litigation in Spain - they ain't gonna do that for a BBL (IMO).

Normally, my advice would be for you to ensure that you personally are not in default of any debts. In an ideal world, just the company should be in default. But as you have debts of £140k, a personal bankruptcy is called for. That way, the debt is written off and it will not come back to bite you (with interest!) if you ever return to the UK.

There is a ridiculous amount of misinformation online about leaving the UK with outstanding debt. All sorts of dire consequences are cited, most of which are either rubbish or just theoretical as it requires the plaintiff to go to enormous effort and expense.

My 30 cents worth - have a few glasses of red and enjoy the Spanish nightlife, followed by a good night's sleep. In vino veritas et in vino pax!

Thanks The Byre! Yes my husband left Denmark 10 years ago and couldn't pay the negative equity on his house. He went to see a retired lawyer and accountant, they said there's not much the bank can do once you've left the country. We heard from the bank once or twice when we got to the UK then we heard nothing else since.

Getting any type of paperwork done in Spain is pretty difficult, they literally need a piece of paper for everything.

I guess if they did hire a Spanish lawyer it would be a complete waste of time as I literally own nothing here, just my laptop and clothes.

I've just looked up bankruptcy which costs around £680, I'm going to struggle to even find that at the moment so I'm not sure what happens in that case? Hopefully I won't ever have to come back to the UK, I get my residency here in the next couple of weeks.

I have read some stuff online which got me really worried, however, on the Government's website it didn't sound half as bad. I guess some companies scare you so you use their services?

I actually drink white wine which costs only £2-3 a bottle here! Thanks for your help.

 

[Michael Loveridge]

If you're planning to stay in Spain for the next few years I wouldn't even contemplate paying the £680 to declare yourself bankrupt - better spend it on white wine!

Because of the complexities of cross-border litigation there's no way on earth that UK creditors are going to pursue you in Spain - ironically, you're one of the relatively few people for whom Brexit really has been a boon!

After 6 years the debts can't be recovered because of the Limitation Act 1980 (provided you haven't acknowledged that you owe the money within that 6 years). It may seem like a long time, but believe me it'll be gone before you know it.

You've been through hell, and you deserve a break. Forget the wreckage in the UK and concentrate on starting your new life there. Good luck, and Viva España!

 

[Ian J]

After 6 years the debts can't be recovered because of the Limitation Act 1980 (provided you haven't acknowledged that you owe the money within that 6 years).

Isn't it six years since they last tried to collect the debt?

 

[Michael Loveridge]

Isn't it six years since they last tried to collect the debt?

No, it's 6 years since the debt became due.

 

[JEREMY HAWKE]

Isn't it six years since they last tried to collect the debt?

I think there is something where a debtor has demonstrated that they have received correspondents or tried to discuss the debt that the court will take it from this date regardless of the age of the debt unless that debt is already subject to a CCJ
So I agree with Ian

 

[MBE2017]

I think there is something where a debtor has demonstrated that they have received correspondents or tried to discuss the debt that the court will take it from this date regardless of the age of the debt.

Most personal debts become statute barred after six years from the last payment or communication from the debtor regarding the debt.

After this period, the debt still exists, but you cannot be taken to court for payment, so if you choose to say no to any payments after this six year period there is little anyone can do.

Mortgages have a twelve year period on them from memory, the Government if owed money has no time limit in chasing a person for payment.

 

[Jojo210]

If you're planning to stay in Spain for the next few years I wouldn't even contemplate paying the £680 to declare yourself bankrupt - better spend it on white wine!

Because of the complexities of cross-border litigation there's no way on earth that UK creditors are going to pursue you in Spain - ironically, you're one of the relatively few people for whom Brexit really has been a boon!

After 6 years the debts can't be recovered because of the Limitation Act 1980 (provided you haven't acknowledged that you owe the money within that 6 years). It may seem like a long time, but believe me it'll be gone before you know it.

You've been through hell, and you deserve a break. Forget the wreckage in the UK and concentrate on starting your new life there. Good luck, and Viva España!

Thanks for your message Michael, you've made my day!

Thankfully I married an EU citizen before Brexit, which has been an absolute god send (don't tell my husband that!)

I certainly have been through hell, it has been my most awful 2 years ever.

Today I'm going for a bike ride along the sea front in Palma - followed by a couple of glasses of Vino Blanco! The best bit about living here, last night my husband and I went out and had 4 glasses of wine each plus 4 tapas each and it came to the grand total of €15 (about £13)! The public transport here is free for citizens and the electric bike I'm using today is also free to use. Hopefully the next 2 (or 6 years) will be better than the past 2!

Thanks for your help.

Take care, Jo