Company Dissolutions (striking off)

If these conditions are in order, there are several steps that you’ll need to carry out to legally close the business and dissolve the company:

1. Convene meetings of the directors and shareholders of your company (depending on the memorandum and articles) to confirm the authority to start the dissolution process
2. Ensure that all employees are paid in full including redundancies, final wages, holiday pay and salaries
3. Inform all interested parties including HMRC that the company will be closing; request that your various tax positions are ended
4. Pay any final tax bills
5. Ensure any outstanding Companies House documents have been filed
6. Make sure that all shareholders and directors have a copy of the DS01 form (available from Companies House)
7. Ensure that any managers or trustees of employee pension funds are also notified and have a copy of the DS01 form
8. Get the company’s accounts and assets in order – make sure that any assets are shared amongst the shareholders before the company is struck off.  If they aren’t, assets will go to the Crown
9. Close your bank accounts
10. Send the DS01 form to Companies House
11. Pay £10 filing fee (not from the company cheque book!)

IMPORTANT NOTE: You will need to keep records of your business documents for seven years after the company is struck off the register.  If you’ve employed people, you must keep the employer’s liability insurance policy for 40 years from the date of the company dissolution.

Dealing with creditor pressure is not an uncommon problem for many company directors. It can, however, be worrying and distracting. It’s easy to find yourself spending too much time ‘fire-fighting’.

However, if you’re experiencing pressure from your creditors, it’s vital that you make dealing with it a priority to protect both your business and your creditor relationships. Here we discuss the action that creditors can legally take against your business, your rights against creditors, and your options for dealing with creditor pressure.

What action can my creditors legally take?

To put it simply, creditors will not go away, and should the need arise, there are various tools they can use against you to recover the monies owing to them. You need to be aware of what they can do, and particularly what the consequences of each action could be for your business.

First steps

The most common tools that creditors use in the first instance might be:

• Charging interest on late payments
• Selling debts onto a third-party agency (or debt purchaser), which can be more difficult to negotiate with than suppliers

Engaging debt collection agencies to recover the debt.  (Be aware that debt collectors are not bailiffs or enforcement officers and therefore do not share the same rights: essentially, debt collectors have the same civil rights as creditors).

What are my rights against creditors?

Creditors have the right to demand payment from you for the money they are owed, but there are limits to what this means:

• They are not allowed to harass or intimidate you.  You have a duty to keep them informed of your situation, however they shouldn’t contact you excessively, at unsociable hours, or make threats against you.  Nor should they try to involve family members, or your neighbours etc.
• They can only follow legal procedures, such as obtaining court judgments against you, or making a statutory demand for payment (see below)
• They cannot demand that you make larger repayments than the amount you owe.  Creditors are allowed to place additional interest on your original debt, but this must follow the terms and conditions laid out in your agreement

Second steps: what legal action could creditors use against me?

When creditors want to show a more serious statement of intent, the legal options open to them are:

• County Court Judgments
• Statutory Demands
• Notice of Enforcement and Bailiff action
• Winding-up Petitions

Follow the links for more information on each.

What can you do?

Dealing with creditors and collection agencies can be a burden and sometimes difficult, but to avoid more serious implications for your business, you need to keep on top of it.  It’s simple, but honest and regular communication with your creditors is key.

If you are worried about deeper financial issues or tell-tale signs as to whether your business is in trouble, there are a range of solutions that we can discuss with you to help ease pressure or to restructure your business.

Have a look at these helpful topics:

• Informal Arrangements
• Liquidation
• Funding
• Pre-pack
• CVAs
• Sole trader IVAs

Or for more specific tailored advice, contact us directly.

Dissolving your company or applying to have it struck off Companies House register can be a straightforward and cost-effective way of closing a business that you no longer require. But it can’t be used for every business. This quick list of pros and cons will help you decide whether company dissolution is a suitable option for your business.

The key factor that should determine whether you should dissolve your company or liquidate it, is your level of debt.  If you can pay off all your creditors prior to ceasing trading and dissolution, and you have no material assets to distribute, then this option may well be best for you.

If, however, you cannot meet your financial obligations, then dissolution is not an option for your company. In such cases, you may need to consider voluntary liquidation.

Company dissolution: Pros

• Having your company struck off the register is a much cheaper alternative to formal insolvency procedures.  Apart from the time costs, the filing fee is only £10.
• It’s a relatively straightforward process that can be managed by you as company director.
• The process usually takes in the region of 3-9 months from beginning to the company being formally dissolved.
• There is no investigation into your directors’ conduct, which is a mandatory aspect of liquidation.

Company dissolution: Cons

• Your application to have the company struck off can be rejected by most stakeholders or interested parties.  If, for example, the correct procedure wasn’t followed when the company was dissolved; if they believe there are outstanding debts, or that you have traded wrongfully, they can reject your application.
• They can also apply to have the company revived for up to 6 years after dissolution if, for example, they believe that the directors have committed fraud.
• Furthermore, if, as company director, you are found to have outstanding liabilities when the company was dissolved, you may be held personally liable for these debts.
• From the date of the dissolution, any assets still registered to the company will be frozen and credited to the Crown (although this is just a question of properly getting all your ducks in line prior to dissolution).

If you are worried about deeper financial issues or tell-tale signs as to whether your business is in trouble, there are a range of solutions that we can discuss with you to help ease pressure or to restructure your business.

For more bespoke advice, contact us directly.