Share this content

Is company insolvent due only to DLA creditor?

Didn't find your answer?

Looking at a cessation of trade and closure of company.  If a company is solvent except for outstanding directors loans creditors is it acceptable to cease trade and move to a DS01 strike off, even if the director's loans remain unpaid on strike off? ie. can the directors' loans be treated as not falling due (they are unsecured and the directors choose not to call them in, or agree between them who will recover what is left) to avoid the technical definition of insolvency and therefore avoid the obligation and cost of appointing an insolvency practitioner under a CVL?  

If such is true the DLA creditors will need removing prior to strike off as otherwise Strike Off cannot happen.  Is converting to equity the best way to do this and OK just pre dissolution? If the DLA is not converted to equity but written back to P&L  there will be a gain which is taxable to CT.  However in that circumstance can the director claim a capital loss on the loan? Will he lose the opportunity to claim a tax loss if the DLA is coverted to equity, essentially at nil market value just pre dissolution?


Replies (3)

Please login or register to join the discussion.

By johngroganjga
12th Nov 2019 13:55

I think you are overthinking. If the only creditors are aware of the proposal to strike the company off and agree not to object to it, just do it. Job done.

Thanks (1)
Replying to johngroganjga:
By sigcima
12th Nov 2019 14:29

Thanks for the response. Not uncommon for me to overthink something! So you think from point of final invoice or expense (ceasing trade) wait three months, by which time collected all debts, extinguished all other creditors, then complete form DS01. At that point there will be no other creditors other than directors (who will not object.) I will of course inform HMRC and pay them their CT from cessation of trade before DS01 goes out. I've heard HMRC object by default to DS01 but that you generally don't hear anymore.

Thanks (0)
Lisa Thomas
By Insolvency Practitioner
12th Nov 2019 15:16

I would think the Company can just send the notice to the Director (and any other creditors like HMRC) of intention to file the DS01 and, assuming neither they or HMRC object, then file the DS01 in due course.

HMRC are highly likely to object if final returns not filed.

In any event unless the Company is liquidated, voluntarily or otherwise, C House will eventually strike off for non filing of statutory returns.

Thanks (1)
Share this content

Related posts