Dissolving your company - Frequently Asked Questions
Q. My company has lost its only serious customer, sales are virtually nil, can I just close down and dissolve the company?
A. In theory yes, provided, of course, the conditions are met. But, remember the company should be dormant before the procedure commences. If you have ceased trading and want to dissolve the company call us now on 08009700539.
Q. Our company has ceased trading but has £10,000 of debtors, £20,000 of creditors. How do I pay them off properly?
A. Well the straight answer is: to collect debts, pay the creditors under order of priority and insure that you comply with all of the rules of dissolution. See Creditors A Guide for details of the order of priority of creditors'.
Of course it is never as easy as that! You should take advice from an insolvency practitioner, turnaround practitioner or accountant who is experienced in this method. Call 08009700539 for further details.
Remember if you decide to conduct the dissolution yourself to keep scrupulous records of all transactions, correspondence, decisions taken and payments made. This will act as supporting information for your application to Companies House and then the creditors to dissolve the company.
Q. We have diminishing sales and our office / factory has 10 years left on the lease. Can't we just cease trading, pay rent up-to-date, close the factory / office and then dissolve the company?
A. It is unlikely. As ever this depends upon the terms of the lease. Have the directors given personal guarantees to the landlord? What is the relationship like with the landlord? Remember, all creditors need to agree to the dissolution process, that includes landlords. Although you may be able to pay rent up to date the company and the directors may still have a liability for up to 10 years after that period. This is called a contingent creditor For further details of the nature of contingent creditors see creditors - a guide. Talk to us if unsure - call 08009700539.
Perhaps the directors should consider other options? See options. Call us if you have a long-term lease or personal liabilities. We can help in all such issues and plan a very structured way through your problems.
Remember to look at your objectives first! What do you want to do with this business? What do you want to do with your life? These issues should be discussed as part of your approach to the closure or continuation of the business.
Q. I am a director of a failing business where a few "bad decisions" have been made in the past. If we can conform to the dissolution conditions, which I think we will, can any creditors pursue me for my personal liability or my incorrect actions?
A. That depends on the "bad decisions"! Simply, if the directors have broken the law, dissolution wont necessarily hide it. Remember any creditor or shareholder or liquidator can resurrect the company for up to 20 years after the dissolution process has been completed. Such actions may come to light in the course of investigations by a liquidator of other companies who by following paper / audit trails may come upon questions that need to be answered. It is possible that your actions will never come to light but in all events, it is important to keep records of your conduct, decisions and actions over the dissolution period. If you have any further questions on this please do not hesitate to contact us by e-mail or by a freephone number.
If you want our dissolution pack that has template letters and a 25 page guide which takes you through the whole process easily then email email@example.com
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.