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Company strike off - recovering debt

Recovering redundancy pay from closed company

A client of mine worked for a local business which was run by though a limited company. Recently, she was made redundant (albeit with little due process) and the business closed with effect from 30 November. She received no redundancy pay and the director of the business has been absent for some days and had not discussed the matter.

We discovered yesterday that the company was about to be struck off the register as it had not filed accounts for a while. I have little doubt the director knew of this and has cleared out the company's bank account first. Thankfully, we managed to get the process stopped (for the time being); the next stage I think is to get the debt established, via ACAS and then an employment tribunal. Then try and enforce the debt, possibly in making the company formally insolvent. Then, when the company is in liquidation, claim redundancy from the government's compensation scheme.

What I was wondering is is there any way of going straight to the government's compensation scheme without going through the process of putting the company into liquidation? And could a claim have been made if the company had been struck off as, obviously,  this is not the same as insolvency.

Also, generally, what do Companes House think they are doing in removing active companies from the register? It seems they are colluding with rogue companies in defauding employees and suppliers of their opportunity to collect money due to them.

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01st Dec 2018 09:36

Be careful that the costs don't exceed the money your client will receive. I'm not an expert and I'm sure an insolvency practitioner will comment but if your client seeks to recover the debt they may have to pay for the insolvency. You might need to look into who pays.

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01st Dec 2018 10:59

Did the director formally close the company with the appropriate procedure including notifying all interested parties
The director(s) must give a copy of the application to all interested parties within 7 days of it being submitted.

Interested parties:-
shareholders
creditors
employees
managers or trustees of any employee pension fund
directors who have not signed the form
It's a criminal offence not to tell all interested parties

Your client could be considered a creditor

As for criticising Cos House. They have a procedure, which if followed
should stop fraudulent actions by "rogue directors"

The only way a claim could be made once the company has been struck off is to apply for it to be restored

I hope you're not acting pro bono
as this could be time expensive

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to bernard michael
01st Dec 2018 18:43

Thank you. The striking off was at Companies House instigation for non-filing of accounts. This appears to have saved the director the trouble of going through the necessary procedure.

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to bernard michael
01st Dec 2018 22:33

And how many people have been charged Bernard. And what happens when CH instigates strike off they simply don't bother to check on the company's debts

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to carnmores
01st Dec 2018 23:38

carnmores wrote:

And how many people have been charged Bernard. And what happens when CH instigates strike off they simply don't bother to check on the company's debts

It's not Co House'responsibility to check on a Company's debts. If the director hasn't fulfilled his statutory obligations and filed accounts then Co House are duty bound to strike the Company off. See my other post for some advice.

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to legerman
01st Dec 2018 23:56

It's more likely to be the confirmation statement and I disagee with CH actions where is that in the CA

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to legerman
06th Dec 2018 13:28

Why are Companies House duty bound to strike off trading companies who are a few months late with filing accounts? Where do I find that in law? They should be chasing directors who are in default.

Of course a company's debts should matter to Companies House, that is why there is a huge raft of legislation around insolvency and unfair preferences. The Registrar is making it easy for businesses to circumnavigate these safeguards and defraud creditors, that is not his role.

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01st Dec 2018 15:54

Do we know if CH decided to strike off or whether director made application? Also we don't know how much redundancy is due, what real chance is there of receiving it. Is it much more than statutory redundancy which can be reclaimed from government. 1st sentence of 1st reply is apposite.

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to carnmores
01st Dec 2018 18:45

Thank you, I take the point. A problem is though, that in order to reclaim statutory redundancy from the government, it seems you have to prove insolvency. I don't think that just showing the company has been struck off is enough.

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to John B Price
01st Dec 2018 22:35

Read s1000 etc companies act

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01st Dec 2018 23:48

What is the date on Co House that the strike off was proposed? It takes a couple of months from that notice appearing to being struck off.

How long are tribunals taking these days? I'm just wondering whether it's worth objecting to strike off or not but you'll definitely need to have the tribunal before the Insolvency will even consider paying out.

If it's any consolation I struck a company off in 2009 and the Insolvency Service paid out once the employee won at Tribunal so unless things have changed in the meantime that should still be the case. It may be worth having a word with them to find out the score.

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to legerman
02nd Dec 2018 16:10

Thanks that is very interesting. See my latest update.

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03rd Dec 2018 12:09

Latest update, my client's former employer is furious with stopping the striking off - but has paid up the redundancy money from his own pocket. I guess he is trying to bilk other creditors so wants the process back on the road asap.

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02nd Dec 2018 16:32

i have just re read s1000 ca2006 et al and as far as i can determine CH are not following correct procedure. Also i have a client company that was renting office spaces out and ceased trading when network rail took the property back, all taxes were paid up and the company closed , but HMRC continue to object to its striking off so i asked CH to tell me which part off HMRC objected the answer was ' sorry we don't know'.....

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to carnmores
03rd Dec 2018 09:45

Section 1000 only comes into play 'If the registrar has reasonable cause to believe that a company is not carrying on business or in operation'. I cannot see that being a little bit late with one filing is sufficient grounds for thinking a company is not operating, nor does it preclude the possibility that some people may have good reason to want it retained. In particular, such an assumption offers rogue directors a way of vaporising their company, simply by doing nothing, and this can act against the interests of creditors and employees.

The next step, the letter writing charade, is aimed only at directors, it does not consider stakeholders who interest may be opposed to the personal interests of the directors.

Controls are built in to insolvency and voluntary striking off legislation to limit dishonest behaviour. The Registar is offering a simple way to circumnavigate these controls. No doubt this makes his statistics of companies in filing arrears very much better. However, it is others who may bear the cost.

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to John B Price
03rd Dec 2018 10:24

broadly in agreement , in practice they cannot tell other stakeholders except by the gazette listing

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03rd Dec 2018 10:30

Hi I haven't read all the replied so apologies if I am repeating something.

If the Company enters a formal insolvency procedure then the employees can make claims to the redundancy Payments office AKA The Insolvency Services for:

arrears of pay
notice pay
redundancy pay
holiday pay
pension contribution shortfalls

(all capped at weekly limit of £508)

If the Company does NOT enter a formal Insolvency procedure my understanding is that the employees have to go to a tribunal and if their claim is successful they can only claim for redundancy.

The employees could club together to get enough funds to pay for Liquidation (c£3-4k) but it might not be cost effective as they may not get that fee back.

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By spuddle
05th Dec 2018 10:33

I had experience of a limited company being struck off despite my objections. My daughter worked for the company ([***] up bakery pre-Christmas season) for a while and the company ceased trading. She and other staff were owed wages and suppliers were also owed. She went to a Tribunal and proved her case and an order was made against the company. The two directors had a string of other previous companies that had been struck off. I objected to the striking off a number of times on the basis that the company had failed to comply with filing of accounts and other documents. I wanted to force them to have accounts prepared and filed as I suspected other "issues" such as overdrawn loan accounts. CH postponed the removal of the company but eventually - as I couldn't prove that the debt was being "actively pursued" (how could it be) they let it be struck off. I was disgusted but was told it was their duty to remove companies that had ceased trading and no longer required. I told them it was their duty to ensure that directors fulfilled their legal obligations.

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to spuddle
06th Dec 2018 11:13

I seems "no longer required" effectively means no longer wanted by the directors. The fact that it may be required by creditors is not been taken into account.

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By Joyces
05th Dec 2018 12:24

I've seen two client companies recently dissolved by CH for non filing of accounts, both would owe HMRC money if those accounts were filed but both had directors who spent all the money that came into the company then panicked about how much tax they might owe, went out to get PAYE jobs, stopped preparing any accounts info for their companies, stopped replying to me or HMRC or Companies House and now will not have to answer for their actions - That's two this year but several others in the past have gone the same way so it seems to me that so long as you hold firm and don't reply to any correspondence for a long enough time period your legal responsibilities get swept away.

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05th Dec 2018 13:17

That's right it's the easiest way to get rid of of a problem company. Directors resign and no docs filed. Takes about 2 months

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