Winding Up A Company

[ANOTHER REBEL]

I need to wind up a X Ltd that owes my brother's Co. £246K as soon as possible. My brother's is by far the largest creditor. X Ltd is insolvent. The last set of accounts confirm this. There is £80K in the hands of a 3rd Party, which are to be paid over to X Ltd in about 10 days time. I am concerned that if the £80K is paid to X Ltd. it will disappear. As far as I can work out there is already £60K or more that has disappeared, having been taken out in directors loans, or in paying the debts of another Ltd. Co that the Director of X Ltd owns.

My brother due to the recession is working abroad, and has asked me to attend to this on his behalf.

There is no time to make formal demand and then obtain judgement.

Is it possible for me to petition the court to wind up X Ltd., on the basis that "the company is insolvent, and that it is just and equitable to do so"

 

[akirk]

I am not sure which thread I should be answering as you have posted this twice now... but at least a few less capitals

I would be surprised if you could do something like this on behalf of your brother without power of attorney.

How do you know what has been taken out of X Ltd, or that it has gone out in direcotrs' loans - do you have inside information into the company? this kind of information doesn't become public until the company accounts are filed which might be a year or more away...

If there is an issue like this and a company is wound up the liquidator can retrieve such funds, so it is unlikely to be a reason to accelerate a process as serious as this.

You are making serious allegations here - there is no way you can force this kind of thing through - it would have to go through the courts (the only ones with the power to wind up on a 'just and equitable' basis), so your first step would be to go and talk to a lawyer - no online forum can accurately advise you on this kind of situation...

Alasdair

 

[ANOTHER REBEL]

I am quite aware that it will have to go through the Courts. What I want to do is get a Winding up Order as soon as Possible. X Ltd was set up to develop industrial units on a specific site. The development was completed in May08 and the units sold in Nov08. I know exactly what the accounts showed at that point. X Ltd had certain assets, which did not cover its debts. X Ltd has not traded since May08. There were various retentions and recoveries of costs due, which have all know been received. The last set of accounts show that some of these funds have been paid to the director and a company that he controls. I am not making allegations, I am simply stating facts.
A search at Companies House shows that his company is currently subject to a Voluntary Arrangement. I do not know with whom, but from the names of the "Agents" or whaterver the correct title is I suspect that this is with HMRC.
I also know that formal demand has been made on the director personally for repayment of £95,000 secured on a mortgage of land, on which he has not paid any interest since he purchased the property in Dec 07.

 

[bovine]

Why go to the effort and expense of winding up this company? Do you think if you get the company wound up the money coming into the company will go to your brother?

It is quite likely that your brother will never see the money and any money coming in will be taken by the preferred creditors, leaving little for your brother.

Obviously this is a huge amount of money so I would suggest getting professional advice.

 

Winding a company up is, by definition a final act. It might give you personal satisfaction, but in reality you will get little or no money, as secured creditors come first sand all others must be paid in equal portions.

Why was your brother not part of the CVA?

Your only realistic hope of getting money is to pursue it through the courts.

 

[ANOTHER REBEL]

There are no preferential creditors. The cost of a petition to the court I believe is £190 plus a deposit of £1000 for the Official Receiver's Fees.
A solicitor my brother spoke with wanted £5000 up front, so that he could make a full investigation of the circumstances, and then give advice on what he believed the likely outcome would be.
At the end of the day the Liquidator could take a different view, and it is his views that would count.
Another compelling reason for proceeding with this as soon as possible is that HMRC are chasing for outstanding Corporation Tax on theoretical profits.

If the liquidator succeeded in recovering all the monies that should be in X Ltd, then the final loss to my brothers company would be about £100K, which could be carried back against previous years profits and the Corporation Tax Liability would disappear.

All I need to know, is whether I can present the petition to the Court. If necessary I can be appointed a Director of my Brothers Company to do this, or must I use a Solicitor.

 

[ANOTHER REBEL]

Why was your brother not part of the CVA?

The CVA is in respect of another Company controlled by the director of X Ltd.

Total debts of X Ltd are £260K of which my brothers company is owed £246K. In any distribution he will get 94p in the £.

There are no preferential or secured creditors.

 

[akirk]

I think that you should use a solicitor.
you would certainly have more power to do something as a director of your brother's company than someone who legally is irrelevant and not involved...

I am sorry to say this, but I am slightly confused - the difficulty in reading these things online - but you seem to have far more detailed knowledge of the financial happenings of that company than would be normal - e.g. how do you know that they have not traded since May 08 - they might have traded last week and you wouldn't know... it seems that possibly we are not seeing the full details here - so I don't think that we can advise - see a solicitor.

Alasdair

 

I think that you should use a solicitor.
you would certainly have more power to do something as a director of your brother's company than someone who legally is irrelevant and not involved...

I am sorry to say this, but I am slightly confused - the difficulty in reading these things online - but you seem to have far more detailed knowledge of the financial happenings of that company than would be normal - e.g. how do you know that they have not traded since May 08 - they might have traded last week and you wouldn't know... it seems that possibly we are not seeing the full details here - so I don't think that we can advise - see a solicitor.

Alasdair

I'm inclined to agree. if you are drawing this information from their accounts, then remember that accounts, by their nature, are out of date. If it is from 'inside sources' then you need to question very closely their relibability.

 

[ANOTHER REBEL]

One of you who responded to my original message, suggested that X Ltd may have traded last week. I rather hope it has. X Ltd is insolvent and this would add Fraudulent Trading to the existing offences of Fraudulent Preference and Fraudulent Conveyance.

Having spoken to the Insolvency Service I have been advised by them that it is not necessary to use a Solicitor, although this is the normal practice. All that can be lost is the Court Fee of £190. The £1000 is a deposit to cover the Official Receivers costs, and this would be refundable. If the petition is thrown out by the Court, I can still go down the route of making formal demand which does not cost anything and petition again which will only cost another £190.

I am "allergic" to using Accountants and Solicitors etc., the only professionals I regularly use are Valuers.

Accountants and Solicitors, have so many caveats in their advice, that they always have a getout no matter what the outcome. They also always state that this is only an opinion. I have a reasonable working knowledge of certain sections of the law and accountancy and have yet to find my intepretation differs in anything more than in degree from that of a so-called expert.

I would like to thank all of you who have responded to my query.

I will let you know what transpires.

 

[PaulCCS]

The issue is that the winding up petition will carry more weight if you are represented by a solicitor. They will also make sure that it is filed correctly. I know it goes against the grain paying solicitors but sometimes it's worth it and this is one of those occasions.

If you need help putting in touch with a recommended solicitor who won't charge the earth then please let me know.

 

[ANOTHER REBEL]

In the end I found a Solicitor who was prepared to accept instructions without making a meal of things.

A winding up petition was issued earlier this week and the hearing will take place in December.

Having presented him with all the information at my disposal, the Solicitor is confident of success.

He cannot see how it can be defended.

I will keep you updated of the outcome of the hearing, and in due course the outcome of the liquidation.

I believe that the sole Director will be struck off and face personal bankruptcy.

 

[Robert Moore]

The director of the business will only be struck off or made personally liable for the companies debts if it can be shown that he was trading wrongfully.

 

[ANOTHER REBEL]

How about

1) Paying himself an illegal dividend (The company has no accumulated profits, and has never paid CT. The other shareholders have not received a dividend, although between them the hold more than 50% of the shares.
2) Granting loans to another Co. he controls.
3) Taking out money as directors loans.

All at the expense of creditors.

Failing to file accounts at Companies House.

If this does not get him struck off what will?

 

[Alan R Price]

ANOTHER REBEL

I have sent you a direct message but in case you don't pick it up, the main points are below.

I have seen your thread about the winding up petition presented by your brother's company. This is a case where we we would like to be considered for appointment as liquidator. We have considerable experience of dealing with compulsory liquidations and have been very successful at pursuing claims personally against directors and tracing assets disposed of by them, for the benefit of the creditors. It's not always just the secured or preferential creditors who get paid. We are usually happy to work on a no-win-no-fee basis if the case is strong enough and there is something to go after even if on the face of it the company has no assets.

Please have a look at our website: www.marshmanprice.co.uk for further information. If you would like to call me the number is on the website.

I will be happy to attend a meeting or speak on the telephone with you free of charge to talk the issues through and agree a way forward.

Regards,

Alan R Price

 

[mahutchinson]

A director cannot be struck off - only the company.

 

[ANOTHER REBEL]

A director cannot be struck off - only the company.

You are arguing about semantics.

"A director cannot be "struck off" but he/she can be disqualified under the Company Directors Disqualification Act 1986 if he/she has been guilty of misconduct. Disqualification means that a person cannot be named as a director or even act as a director of a limited company - effectively banning them from holding any senior influential role in a company. This extends to employing "stooges" to act for them.

Contravention of a disqualification order or agreement is a serious criminal offence and usually leads to imprisonment."

Effectively the Director is Struck Off from the Register of Directors, and can no longer act as a director of any Ltd. Company during this period.

 

[ANOTHER REBEL]

As promised, I am reporting the outcome of the Winding up Petition.

A petition was presented on the grounds "that the company was insolvent, and that it was just and equitable to do so".

The petition was supported by another creditor.

The hearing has taken place, and was not defended, and a "winding up order" has been granted.

In the meantime we also succeeded in blocking the release of (£80K held on behalf of the company by a third party) to the Company.

 

[Alan R Price]

As promised, I am reporting the outcome of the Winding up Petition.

A petition was presented on the grounds "that the company was insolvent, and that it was just and equitable to do so".

The petition was supported by another creditor.

The hearing has taken place, and was not defended, and a "winding up order" has been granted.

In the meantime we also succeeded in blocking the release of (£80K held on behalf of the company by a third party) to the Company.

A great result!