Ann Lovatt
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winding up a company with debts

winding up a company with debts


I have a client who is mid-divorce, his solicitor has suggested he winds up his building company which is loss making & has been insolvent last couple of years anyway.(Yes I have kept telling him he shouldn't still be trading!). As he has little work on hand just plans to operate as a subbie for a while?

No "real" assets but large creditors mostly due to bank overdraft and large back dated unpaid CIS & VAT.

My understanding is that if we were to request to winding up the company with Companies house, HMRC will put in an objection due large amount of o/s CIS etc. 

 Any one have any experiance of this situation, who could advise me, as client has very little funds to appoint liquidators/ administrators etc, in fact I'm dubious about doing last years accounts as not sure I will get paid either  :-(

But don't want to see him made bankrupt, or stopped from being a directors in future etc as geniune guy just got out of his depth!

Any help much appreciated?


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04th Jan 2013 13:01

Payment up front

If you do agree to do any work you should ask for payment up front. I did some work for a genuine guy and then he went bust and I didn't get paid. He wasn't planning to be like that but you have to look after yourself.

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By Glennzy
04th Jan 2013 13:03

Offical Receiver

Have you tried the official receiver I think it costs about £900 to put the company into voluntary receivership.

The director  has to attend court and explain what went wrong, but considering the sector he trades in this is not unusual these days. After that the offical receiver does it all. Your local IP should give your guy a free half hour to explain the options.

As long as he not took any large cheques for himself in the days before he should be free from been struck off as a director etc.

From your point of view is there any point in preapring final accounts as in my experience they dont normally happen in year of insolvency. You may have to prepare a statement of affairs at todays date, but i wouldnt bother preparing the final figures, especiallly if you are unlikely to get paid.


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04th Jan 2013 13:08

Waste of time

I would think it a waste of time to prepare any historic financial statements particularly as you're unlikely to be paid. Is there a personal guarantee attached to the overdraft? On the basis that there isn't the client should just write to the bank, HMRC and any other creditors to explain that the company is insolvent, has no assets to realise and no funds to appoint a liquidator and the director will therefore be applying for the company to be struck from the register.

I'm afraid being out of his depth won't cut it - as a director of a company you shouldn't be out of your depth. That's not to say he will be disqualified, they may very well not look at his conduct at all.

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04th Jan 2013 13:21

Office receiver doesn't care

I had a client who didn't pay me and was wound up after the director took lots of money out of the bank with no paperwork other than signing the cheque. He didn't provide any accounting records and even though the official receiver said that they'd tried to locate the director via the bailiffs the bailiff's said that they'd returned the warrant because of errors. The official receivers should be closed down and replaced with people who care.

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04th Jan 2013 15:34


thanks for the advice, I had a feeling accounts would not be required, although almost done anyway as I do his VAT each quarter.

I think I will advise as James says, as he is already speaking to bank & HMRC re CIS & VAT. As I doubt he will want to go to court & say money went on family holidays & nice cars they no longer have!

At least, I have been paid up to date & yes I will make sure I have funds in advance for any more work.



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