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Insolvency with limited company

No funds to pay insolvency practitioner

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Hi all

A quick query that I am hoping you may have some input on...

I am a director of a limited company that became insolvent recently.

There are no funds (or sellable assets) left within the company and having informed creditors I have been asked by them to give them details of the insolvency practitioner dealing with the case.

The only problem is that one has not been appointed due to no funds being available to pay them. Is there another way out of this predicament other than appointing an insolvency practitioner? If so, would anyone have a link to a site with guidelines on this?

Thank you in advance

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19th Apr 2019 11:56

the Official Receiver will take the job but the company has to liquidated first. The creditors will likely petition the court if they are not paid if they think it worthwhile

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to carnmores
19th Apr 2019 12:05

Agreed - it is effectively for the creditors, not the directors, to decide whether to have an insolvent company liquidated. The directors could of course be among the creditors of the company.

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to Wilson Philips
19th Apr 2019 12:14

Call me a cynic, but I think that the directors are often debtors rather than creditors of the company.

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to Red Leader
19th Apr 2019 12:17

I wouldn’t disagree although it is also often the case that the directors have been trying to keep the company afloat - I have a case exactly like that at the moment.

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By zebaa
19th Apr 2019 12:09

Resign as director. Co house will warn the company must have a director. Note the warning and do nothing else. Co house will then strike the company off.

If you are feeling helpful you could write to the creditors before you resign, giving your intention and inviting them to wind the company up, but if there are no assets then they are unlikely to do so.

Do not remain as a director beyond the due date of the confirmation statement as failure to file, & pay, is an offense.

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to zebaa
19th Apr 2019 14:05

zebaa wrote:

Do not remain as a director beyond the due date of the confirmation statement as failure to file, & pay, is an offense.

Or, of course, file one.

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to lionofludesch
19th Apr 2019 14:32

if the CS is filed then CH will not strike off

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to carnmores
19th Apr 2019 19:48

Companies House will eventually strike off a company that doesn’t have a director but this can make it more difficult to manage any company assets.

https://www.gov.uk/closing-a-limited-company

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19th Apr 2019 12:11

One thing to watch as a director is not to end up preferring creditors wrongly (ie paying yourselves or friends and leaving other creditors out of funds).

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20th Apr 2019 09:47

You mentioned in a previous post that the company owed it's corporation tax. HMRC may decide to petition the court if they can see that the company has assets or the director has taken a loan from the company or illegal dividends have been taken.

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20th Apr 2019 10:19

Just checking.
Do the director/s owe the company money ?

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20th Apr 2019 14:39

If the Company doesn't have any assets or means of paying it's creditors then it should apply for strike off. Please ensure it is done correctly if you go down that route.

Please note that an outstanding directors loan is an asset

https://www.businessdebtline.org/EW/information/Pages/Business-insolvenc...

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20th Apr 2019 21:51

No one on this forum will recommend it, and the mere mention of what to do will usually invite severe criticism, but if you know you have genuinely done everything you reasonably could to keep the company going and don't have a directors loan account in DR, then I would say.

"Who lives in a pineapple under the sea?"

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to thevaliant
21st Apr 2019 08:04

thevaliant wrote:

"Who lives in a pineapple under the sea?"


My children did show me this video last night
https://www.youtube.com/watch?v=-946Sjqijyc

It is the song High Hopes by panic at the disco produced by editing parts of SpongeBob.

However, I don't quite understand how SpongeBob helps in this thread.

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to johnhemming
21st Apr 2019 13:36

johnhemming wrote:

However, I don't quite understand how SpongeBob helps in this thread.

Bless, how lovingly naive & moral.

Thanks (1)
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21st Apr 2019 08:03

I would remain as the director, cease trading immediately (if not already) and invite creditors to wind the company up. Continue filing accounts and returns as normal. If any creditor obtains a CCJ, then explain to the bailiff the situation. If no-one takes any action, then file a DS01 in 12 months time, and distribute to every single creditor and member under s1006 CA06

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22nd Apr 2019 11:47

May I direct you to two Accweb articles on this subject.
Liquidation : Get the details right
https://www.accountingweb.co.uk/business/finance-strategy/liquidation-ge...
>> it gives a step by step guide as to what needs to be done
Also...and most importantly
Get the details right :Buying the right to recover debts
https://www.accountingweb.co.uk/practice/general-practice/get-the-detail...
>>Dare I say that I trust that there are no creditors? As the text in the 2nd article states:
"Whatever the reason put forward for incorporation many businesses do so either to save tax or because the directors believe that if a company fails the word 'limited' means just that – that their liability to debts will be limited or hopefully nil."
Note Johnhemming's comment
Until Apl 2020 HMRC are not preferential creditors but if a company goes into liquidation/gets struck off HMRC have the right to come after the directors for payment - which they do.

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to Jennifer Adams
23rd Apr 2019 10:15

Yes indeed. those who think SBP is the panacea for limited liability overlook the myriad of personal liability provisions against directors. To be truly protected you need to operate as a corporate director of the trading company, so you would have to use an IoM etc. company that allows corporate directors.

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24th Apr 2019 15:23

I'd be happy to talk through the options as I see them - [email protected] if you want to get in touch. The information given isn't enough to advise on though and so more info is required - suffice to say you want what is best for you and the creditors and not simply another fee for the insolvency professionals when there appears to be nothing in it for them.
Keep notes of what you are doing and why (helpful having contemporaneous notes lest mud should be flung in the future) - your actions now should all be with a view to minimising losses to creditors.
Good luck!
Peter

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24th Apr 2019 15:31

My advice is to ring an insolvency practioner - perhaps your accountant can recommend one. Be honest about the suituation make a note of when you called date and time and to whom you spoke. This in my view shows that you are trying to do the best. The practioner will give you some advice and as I said note it and follow it.

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24th Apr 2019 15:31

My advice is to ring an insolvency practioner - perhaps your accountant can recommend one. Be honest about the suituation make a note of when you called date and time and to whom you spoke. This in my view shows that you are trying to do the best. The practioner will give you some advice and as I said note it and follow it.

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