Spongebob/Ltd Co Insolvency Questions..

[alexdxb]

Hi All,

I am considering the Spongebob method for my Ltd company but I have a few questions..

Situation:

Accounts/VAT up to date - no money owed to HMRC
No overdrawn DL account - (in fact it's in credit as I have been funding commitments personally)
£8k left on BBL
£7k owed on overdraft/business credit card. No other creditors.

It has become impossible to continue for various reasons, a turnaround in the situation no longer feasible, with no more personal cash to keep it going, and the bank has now recalled the overdraft. I am out of options - I cannot afford to fund an IP and the company has no assets.

If I do the Spongebob method, I have a few questions around what needs to be done:

1) VAT registration - do I need to deregister following ceasing trading? Everything is up to date but the next return is due in March.
2) Confirmation statement - do you still file or just do nothing?
3) Annual accounts - latest accounts were filed last month so all up to date with no money owed, but do final accounts need to be submitted following ceasing trading? Then next year, are dormant accounts still filed or again just 'do nothing'?
4) Is it worth applying for the company to be struck off or no point given the BBL? I understand from other posts that it will be objected.

Appreciate any advice.

Thank you

 

[pentel]

Is there a personal guarantee on the bank overdraft?

 

[alexdxb]

Is there a personal guarantee on the bank overdraft?

No. no personal guarantees on anything.

 

[Lisa Thomas]

See here for guidance: https://www.gov.uk/strike-off-your-company-from-companies-register

 

[Spongebob]

See here for guidance:

That is unlikely to work as there is £8k outstanding on a Bounce Back Loan. An objection will automatically be raised against any voluntary strike off.

I would simply write to the creditors explaining that the company is insolvent and has no realisable assets. Invite the creditors to wind the company up.

Your company will then join the countless other zombie companies which remain on the records at Companies House as a result of having an outstanding BBL but in reality no longer exist. Under normal circumstances they would simply be struck off. They will in all probability stay like that for currently the outstanding years (decades?) to come.

Simply forget about it and get on with your life.

 

[Lisa Thomas]

Correct - HMRC and the bank will likely automatically object, but it's the next best thing to doing simply nothing. and being able to show the Insolvency Services that the Directors have tried to follow the procedure to the letter, if they investigate why the insolvent company was not liquidated.

Part of that procedure is to send notice to the creditors.

Eventually either a creditor will pay to liquidate (highly unlikely in this case), or Companies House will eventually strike it off for non filing of statutory returns.

 

[jimbof]

Is "simply forget it and get on with your life" good advice? Is it not also a possibility that HMRC / Companies House will decide to then pursue all those who've done this and subsequently failed to meet filing deadlines? Seems Directors not filing accounts and / or confirmation statements as required have hardly followed the procedure "to the letter"; and once there are a few years of non-filing there is a further pattern of not complying with their obligations as a director; these obligations are personal on the director, not something that disappears with the company (eventually). Seems like it could end up having been a bit of a trap (in the fullness of time).

 

[JEREMY HAWKE]

Is "simply forget it and get on with your life" good advice? Is it not also a possibility that HMRC / Companies House will decide to then pursue all those who've done this and subsequently failed to meet filing deadlines? Seems Directors not filing accounts and / or confirmation statements as required have hardly followed the procedure "to the letter"; and once there are a few years of non-filing there is a further pattern of not complying with their obligations as a director; these obligations are personal on the director, not something that disappears with the company (eventually). Seems like it could end up having been a bit of a trap (in the fullness of time).

Well it is if your not going to be a director anymore . If your company is genuinely broke with no PGs and no money owed to the company in DLs then there is nothing more that a director can do

However as we learn on this forum most company insolvencies are not that simple and professional assistance is probably the best course .Ie very few of the new distress story's recently on here dont have covid loans and you cant just SpongeBob a company in that situation .

 

[Lisa Thomas]

there is nothing more that a director can do

Yes there is - they can follow the dissolution procedure to the letter.

As I said above the creditors will likely object but it's better than doing nothing as the Directors have a duty to mitigate the position as best they can.

This is often the problem when Directors leave it too late to take advice and leave no funds remaining to pay for a liquidation.

 

[JEREMY HAWKE]

Yes there is - they can follow the dissolution procedure to the letter.

As I said above the creditors will likely object but it's better than doing nothing as the Directors have a duty to mitigate the position as best they can.

This is often the problem when Directors leave it too late to take advice and leave no funds remaining to pay for a liquidation.

But Bob said

 

[Lisa Thomas]

?

 

[JEREMY HAWKE]

Spongebob said leave it

 

[Lisa Thomas]

My advice isn't that different from SB's. I agree it can be dissolved but they should follow the dissolution procedure to cover themselves.