What happens when you cant afford the cost of a liquidation?
If you are no longer able to continue to trade but there are no funds to place the company into Creditors Voluntary Liquidation you remain in limbo while waiting for any of the company creditors who are owed more than £750 to place the company in to Compulsory Winding Up. This is not an option many trade creditors will even consider, as the cost of doing so will rest with them and if there are no realisations then they will not be reimbursed. However, there could be a lower cost alternative, which should be cheaper and more affordable than a formal liquidation process under the Insolvency Act 1986.
Why not give us a call for a free no obligation consultation. We will talk though all of the options available to you and establish if a Strike Off application could be considered viable and the pros and cons of this procedure.
Strike off application
Once a company has ceased trading for three months under Section 1003 of The Companies Act 2006, the company can be struck off the register at Companies House by filing a DS03 form. However once the form is filed the proposed striking off is advertised and creditors have the opportunity to object within two months.
To try to avoid this one of our insolvency practitioners can prepare a report to the creditors. This report will advise creditors the company has ceased to trade and will provide a full overview of the company, including its current financial position together with an explanation of what the position and outcome would be should they wish to pursue the company via a compulsory winding up order. If no objections are received, we will commence the procedure to strike off the company.
Low Cost fixed fee
If you instruct us to undertake this on your behalf we will ask you to complete a simple questionnaire to let us have the statutory and financial information of the company, and provide us with the set of last full accounts together with a brief history.
Our fees for acting on your behalf are an affordable low fixed fee of just £995 plus VAT and disbursements. For this budget friendly fee, we will take the whole process away from you.
Peace of mind
We will place a redirection of mail to our offices for a three-month period to enable us to monitor the creditor response. This will then alleviate some of the pressure and stress on the directors by not receiving those worrying creditor letters.
Once dissolved, a creditor can make an application to Court for the company to be restored to the Register. Although this process cannot stop this happening, by providing creditors with a full disclosure prior to making the application, the chances of such application will be reduced. There is also a cost consideration for the creditor concerned, which means such applications are generally quite rare.
A word of caution however, new powers have been given to the Insolvency Service to investigate companies post dissolution, in particular, where there is an unpaid bounce back loan. Depending on individual circumstances the service seeks a disqualification order of about 10 years, repayment of the loan and in the most serious of cases the directors face a prison sentence.
As a director you can, of course, make the application to strike off the company without any assistance but for additional peace of mind we can help with an affordable/cheaper alternative to liquidation.
Please call 01795 433655 where we will be happy to discuss whether this low cost procedure may be suitable.
Please note: This blog/news post provides an overview or insight only and therefore, should be viewed as being for guidance only purposes. Legislation does change and your own circumstances may differ from the situation highlighted in this blog. Therefore, before taking any action we recommend you get in touch with us to discuss your own situation.