No other choice but to start sponge bob plan?

Discussion in 'Insolvency' started by Mindovermatter, Dec 8, 2016.

Thread Status:
Not open for further replies.
  1. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    Hi, new to this forum but have been reading over the last few weeks and I must first say thank you for all the good people on this forum who are giving up their time in order to give others sound practical advice to people like myself who find themselves in desperate situations...

    My company has been trading for a few years alongside a bigger company known as X for the purpose of this thread.
    The Director of the bigger company is also a 50% shareholder and business partner of my company, although he relinquished the directors role back in 2013.
    His company has gone into liquidation which has severely affected mine as we were getting 80% of our work through X. To add to the injury, he advised me if this at the very last minute leaving me in a complete state of limbo as to how to proceed.. (he had known about this for the last 3 years..I now know).
    The split of responsabilities was straight forward; I was looking after the day to day running of contracts and bringing new work in, he looked after the financial side.
    Alongside advising me if his company's affairs and the effect this was going to have on mine, he also told me that we owed HMRC pack payment in Vat and paye amounting to around 15k....
    I have been trying since (February 2016) to fill the gap and put us back on the map but his company also owed us 40k which I will never see again and although I have also let 2 employees go and stop myself taking a wage for the last 3 months, I now at the end of this road.
    I have just received debt recovery letters from a company on behalf of HMRC..
    Is the spongebob plan my best option?
    Overdraft is 10k currently overdrawn at 5k, work has completely dried out except for a tiny amount and my directors account is in the positive..
    Really don't know what else I can do..
     
    Posted: Dec 8, 2016 By: Mindovermatter Member since: Dec 8, 2016
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    15,224 3,223
    Does company have any assets?
     
    Posted: Dec 8, 2016 By: Scalloway Member since: Jun 6, 2010
    #2
  3. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    No assets except for basic tools of the trade..all probably worth 2 to 3k
     
    Posted: Dec 8, 2016 By: Mindovermatter Member since: Dec 8, 2016
    #3
  4. Scalloway

    Scalloway UKBF Legend Free Member

    15,224 3,223
    What do you plan to do with the tools?
     
    Posted: Dec 8, 2016 By: Scalloway Member since: Jun 6, 2010
    #4
  5. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    I was either going to sale and keep the monies in a separate account or simply leave them to be disposed of by creditors?
     
    Posted: Dec 8, 2016 By: Mindovermatter Member since: Dec 8, 2016
    #5
  6. Scalloway

    Scalloway UKBF Legend Free Member

    15,224 3,223
    If you sell them the money should go to your creditors. If you do not sell them and no liquidator is appointed the creditors will only get them if they take your company to court and are allowed to to dispose of them.
     
    Posted: Dec 8, 2016 By: Scalloway Member since: Jun 6, 2010
    #6
  7. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    Thanks Scalloway.
    Probably will leave these aside for now..
    So annoyed that my business partner is now leaving me to pick up the pieces after being dumped on in such a way..wish there was something I could do to make him pick up his share of the worries..
    To make matters worse, while I haven't taken anything out of the business for the last 3 months, he has still taken out the rent money fore using tiny part of his commercial building..
     
    Posted: Dec 8, 2016 By: Mindovermatter Member since: Dec 8, 2016
    #7
  8. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,084 370
    I agree that dissolution is probably the best way to go if you can get it through without HMRC objecting due to outstanding returns/accounts etc.

    You may have sufficient funds to Liquidate from the sale of the tools or leave it for HMRC to liquidate.

    If Liquidated the Director's conduct will be investigated by the Liquidator and potential action taken against them if warranted.

    The rental payments could also be challenged and any other drawings he has taken whilst the Company was insolvent.
     
    Posted: Dec 8, 2016 By: Lisa Thomas Member since: Apr 20, 2015
    #8
  9. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    Thanks for the replies..
    He also has used the business account to transfer monies through whilst his own company was going through the liquidation process so as to set up a new company and carry on trading/paying his contractors..
    Is he allowed to do this?
     
    Posted: Dec 8, 2016 By: Mindovermatter Member since: Dec 8, 2016
    #9
  10. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,084 370
    What were the drawings classed as?

    Whatever they were classed as, they are probably overturnable in insolvency on the assumption the Company was insolvent at the time.

    However if the Company never enters a formal insolvency procedure this will not be investigated.
     
    Posted: Dec 8, 2016 By: Lisa Thomas Member since: Apr 20, 2015
    #10
  11. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    Hi,
    I started the SpongeBob plan back in December. Thanks again for the advice from Lisa and Scalloway!
    When I apply to Company House to have the Company strike off, do I also have to advise the creditors that I intend to do so??
    Just a bit confused as to what I legally need to do on that matter..
    Many thanks
     
    Posted: Feb 9, 2017 By: Mindovermatter Member since: Dec 8, 2016
    #11
  12. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,084 370
    Posted: Feb 9, 2017 By: Lisa Thomas Member since: Apr 20, 2015
    #12
  13. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    Thanks for your reply and the link Lisa..much appreciated
     
    Posted: Feb 9, 2017 By: Mindovermatter Member since: Dec 8, 2016
    #13
  14. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    On reading the link, I can't help wondering: why would a creditor oppose a strike off if the company in question has absolutely no assets?
     
    Posted: Feb 9, 2017 By: Mindovermatter Member since: Dec 8, 2016
    #14
  15. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    ..or is it that by appointing a liquidator they may be hoping to find hidden assets?
     
    Posted: Feb 9, 2017 By: Mindovermatter Member since: Dec 8, 2016
    #15
  16. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

    5,355 1,539
    Probably with the main hidden asset being an undeclared directors loan account
     
    Posted: Feb 9, 2017 By: Ian J Member since: Nov 6, 2004
    #16
  17. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    None of that Ian..just seems an expensive way to find out though!
     
    Posted: Feb 9, 2017 By: Mindovermatter Member since: Dec 8, 2016
    #17
  18. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,084 370
    HMRC often object because final returns have not been submitted and they do not know how much their total debt is to be able to decide whether or not to out the Company into Lqn.
     
    Posted: Feb 9, 2017 By: Lisa Thomas Member since: Apr 20, 2015
    #18
  19. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,084 370
    ..or as Ian suggested where there are DLAs disclosed in last accs.
     
    Posted: Feb 9, 2017 By: Lisa Thomas Member since: Apr 20, 2015
    #19
  20. Mindovermatter

    Mindovermatter UKBF Newcomer Free Member

    13 0
    Hi again, i am following the spongebob plan and so far all the advices received on this forum have been so helpful.
    HMRC have just been in contact with me following the letter I sent out back in December asking for the December vat return to be filed.
    I have explained that since we have ceased trading and there are literally no funds in the account, we cannot afford to pay any accountancy fees in order to file anything.
    I have filed for a VAT7 in order to deregister the company but how do we stand with the December vat return not being filed?
     
    Posted: Feb 28, 2017 By: Mindovermatter Member since: Dec 8, 2016
    #20
Thread Status:
Not open for further replies.