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Law firms feeling the heat?

Halliwells LLP faces administration: Hill Dickinson poised to take over its assets from BDO's Dermot Power as administrator. It is likely that there will be office closures and significant job losses.

Manchester based law firm Halliwells fails and faces administration owing RBS circa £20m.

I spoke at a R3 Conference series last autumn which examined Partnership insolvency. KSA was one of the first turnaround firms to propose a CVA for a Limited Liability Partnership law firm based in the south east.

That case was interesting for many of the same reasons as above: high secured debt to Barclays in this instance, property problems with too many expensive offices, too many people and falling sales.

See a case study here for a CVA for a LLP firm of solicitors

What if there was a way to just get rid of my dormant company simply and cost effectively?

Voluntary Dissolution

There is and it could be useful for you. It's called voluntary dissolution and it can remove companies from the Companies House Register if certain conditions are met. Beware though you cannot use dissolution unless ALL of these conditions are met (see detailed guide below).

Providing you meet the conditions then this is a very useful and cost effective tool, AND there is no need to incur liquidation costs, no investigation into your directors' activity and little publicity.....


This process is also known as a voluntary dissolution. This is a provision in the Companies Act to allow the removal of the company from the Companies Register, typically when the company is dormant.

If the company serves no useful purpose, its dissolution removes the need for filing annual returns and accounts. But bear in mind that the company can only be dissolved (removed from the Companies House register), if the following conditions apply:

•The company has not traded for three months; this must be a genuine cessation of trade!


•The company has no assets or property or cash at bank.


•The creditors must be circulated requesting their permission for the company to be dissolved under this process.


•Creditors are given three months to consider the request to dissolve the company and can reject such request.


•The company cannot have changed its name in this period.


•The company may not have disposed of any property or assets (this may include land and buildings, plant and equipment, debtors and other assets).

Please note that paying off debts does not necessarily constitute trading, but for detailed advice on this and all other aspects of dissolution, please call on 0800 9700 539 for further advice.

Dissolution cannot be used if:

Any formal insolvency procedure is in place or proceedings have been commenced. Procedures such as a liquidation, CVA, Administration, receivership or compulsory liquidation under the Insolvencies Act 1986, or scheme of arrangement under the Companies Act 2006.

If any petition has been issued against a company (for administration or compulsory liquidation) then dissolution cannot be used.


Advantages of dissolution:

•It is a quick and clean removal of a dormant company from the Companies House Register.


•Dissolution avoids the costs of liquidation, fees and expenses.


•It avoids formal investigation into the conduct of the directors as required in liquidation or receivership.


Disadvantages:

•Creditors may reject the application; their permission is required to proceed with a dissolution.


•Any shareholder, creditor or liquidator can apply to revive the company for up to 20 years after dissolution.

Want to know more?

See here for the rest of this detailed guide to DISSOLUTION

Or call us now on 0800 9700539 and get some expert advice, we'll help you decide if you can dissolve it with our step by step programme.

Business insolvencies fall to lowest levels since January

Yet more evidence of the HMRC bail out, very low interest rates and the banks' support of struggling companies is found by today's statistics which show that the number of companies entering insolvency in May 2010 fell to the lowest level since January 2010.

The numbers, according to the latest Insolvency Index from information services company Experian reveal an 18% fall in the total number of business insolvencies during May compared to April, bringing the rate of insolvencies down to 0.08% from 0.10% in April.

Medium-sized businesses of 51 to 100 employees saw the rate of insolvencies fall from 0.24 per cent in April 2010 and 0.23% in May 2009, to 0.13% in May 2010 – the lowest point since September 2007.

What is an overdrawn directors current account? What happens to this loan in insolvency ?

In more than 75% of our enquiries from directors of struggling SME companies, we find that this is a major problem. So what is an "overdrawn directors current account"?

Well, usually the company is making some profits and your accountants advise the directors to save tax by paying the directors a small salary and then you take dividends from the reserves of profits made in the past and current years. So off you go taking money out of the business as instructed.

Then something goes wrong!

Although the advice is generally sound from a tax reduction perspective, when a company is performing well; it’s when things go wrong that directors can end up with serious personal liability problems.

See the rest of the guide here...

http://www.companyrescue.co.uk/directors-guides-insolvency/overdrawn-directors-accounts

Portsmouth CVA approved but only just

See the BBC report here

http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/8746162.stm

"Needing the support of those owed at least 75% of the unsecured debt, Pompey's proposed Company Voluntary Agreement (CVA) (sic) got 81.3% of the vote.

The administrator will now press on with the plan to repay creditors at least 20p in the pound over five years.

The only real opposition to the CVA - a requisite for clubs hoping to avoid further points penalties - came from HM Revenue and Customs (HMRC), which has 28 days to appeal against the decision.

Any hopes of success HMRC might harbour will depend on its ability to convince the courts the public purse is owed considerably more than the £24m Pompey's administrators claim".


Had HMRC voted for its full £37m the CVA would have been rejected. It will be interesting to see if the HMRC Voluntary Arrangement Service mount a section 6 action (s6 Insolvency Act 1986) citing a material irregularity?

It has 28 days to do so.

Good article on HMRC Time to Pay Deals

See here for a sensible article on time to pay deals and the requirement for independent business reviews for HMRC debts over £1m:

http://realbusiness.co.uk/article/4443-time_to_pay_hmrc_tightens_vat_rules#comment_1378

As we have commented on the website in question, with large HMRC arrears, the use of a company voluntary arrangement is a very powerful solution.

Need to get rid of a dormant non trading company?

And don't know how to do it?

The Experts - Dissolve Your Company Programme.

Get our UNIQUE and BRAND NEW STEP BY STEP EXPERTS DISSOLUTION GUIDE.

Easy to follow guides, timetables, flowchart, board resolutions, checklists, letter templates and all the forms you need AND how to fill them in! Get an expert job done professionally without professional costs! Your accountants may charge you more than £250-750 for this service, so why not do it yourself and save money?

Money back guarantee if you don't get your company dissolved! Listen, if our expert guide does not work simply tell us and we will refund you in FULL.

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Portsmouth City Company Voluntary Arrangement Proposals Attacked

Griffins the interesting insolvency firm that seems to pick over the carcasses of other insolvency firm's work to try and earn money, has criticised the administrator's proposals for a CVA for Portsmouth City.

Credit Today reports that an interesting spat has developed with Andrew Androniku (one of the the joint administrators) criticising Griffin's sums. They claim that Griffins forecasts are wrong and that Griffins' claim that a CVA could get 99p in the £1 for City's creditors was disingenuous, because they have included VAT in profit forecasts.

In any event, the creditors meeting for Portsmouth's CVA promises to be a stormy affair, if HMRC votes against the proposals for a CVA, as it has said it will, then there is a chance of the CVA being rejected.

Watch the news if that happens, this could lead to a rejected CVA, a sale or liquidation, plus a big points penalties for Portsmouth (as happened to Leeds Utd) and the club face starting the season on minus 15-20 points.

All this will be slap bang in the middle of the World Cup.

Begbies Traynor sees flat insolvency sales

Group expects higher profits are likely in current half year due to cost cutting measures that cost £800,000 to implement.

In a reflective press release, Begbies Traynor said that it “remains confident that the number of corporate insolvencies will rise as the economic cycle develops, consistent with historical patterns for insolvencies to lag the cycle.

“However, in the short term, we anticipate a continuation of the work volumes seen in the second half of the year ended 30 April 2010”.

With the Time to Pay Scheme (or the Business Payment Support Service) still providing support to hundreds of thousands of companies and small businesses, Begbies optimistic forecast for corporate insolvency rates may be thwarted by the Government's continued support for the BPSS?

Football Creditors Rule - HMRC issues Writ

HMRC seeks courts views on the controversial football creditors rule. if a football club enters insolvency the league rules require the club to enter a company voluntary arrangement (CVA).

The CVA MUST pay football creditors in full, this includes footballers, agents and the leagues, otherwise the league will not admit the club to the league and withhold the licence.

This ransom creditor approach has always annoyed HMRC as the tax man and "ordinary unsecured creditors" receive modest or small dividends, whilst rich footballers get paid in full.

Seems inequitable?

Well the courts have yet to find in HMRC's favour.

With Portsmouth's CVA now in the public domain, the football creditors rule once again sees HMRC get a tiny dividend. Will this writ be successful or will HMRC mount a section 6 (s6 Insolvency Act 1986) action when the Portsmouth CVA is approved?
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