Just a quick note to say a big thank you to all the staff at KSA, our CVA was passed today by creditors voting in an overwhelming number including HMRC to accept the proposal as prepared by KSA.
The road to reach today’s conclusion has been bumpy, but at each stage your team has supported and guided us through the issues and we have reached a very satisfactory outcome to the benefit of customers, staff, all creditors and shareholders.
How can I cease trading?
Can I stop trading my limited company and start again if the company has debts?
It is never quite as simple as all that! Just ceasing trading does not make the problem of debts go away, however, it can stop a bad situation getting worse. As such, it will may help avoid you trading whilst insolvent, or more importantly may help avoid a claim for wrongful trading. If the company only has a few hundred pounds of debts then it may be that a dissolution will be an option. However you will need to write to all the creditors, customers, HMRC etc. You will need to follow the correct steps. We do have a dissolution programme that you can use. Email firstname.lastname@example.org for details.
If my company ceases trading and I have not appointed an insolvency practitioner to liquidate the company, what will happen?
If you have employees, or customers who have given you deposits, and of course large debts to suppliers then the backlash may be severe. An employee will not be able to claim back any compensation for loss of earnings or redundancy from the government's national insurance fund until there is a formal insolvency event. This might be a CVA, creditors voluntary liquidation, compulsory liquidation, or administration. In the meantime, as the company entity still exists then the employees will be able to go to an employment tribunal and make a claim. This will not be good publicity as the local press may well run the story about you and your company. Of course any customers who have not received paid for goods will be angry and will seek redress. It should be noted that employees are likely to know your home address and may well hassle you there. This problem will be particularly acute if the company's registered address is your home. In that event bailiffs may come to your home as it is the registered address of the company. If you do appoint a liquidator then the liquidator they will handle all the creditors and take the pressure away. A creditors meeting will be held either in a physical meeting, online or over the phone, depending on the majority of creditors preference. A report will be sent.
So in general it is a good idea to face up to the problems and take some advice. If the company is no longer viable then a voluntary liquidation is the best route to follow as this will help reduce your risk of facing personal liability. Don't forget that just because it is a limited company it does not mean that directors are completely protected. The veil of incorporation can be lifted and the directors pursued personally for the debts of the company if they did not act properly make sure all books and records are ready to hand over to the liquidator.
Starting up the business again
If you start trading again under the same or a very similar name elsewhere then you may come unstuck once your previous company is liquidated as it is not permitted to reuse the name of a liquidated company, without leave of the court. As such you should seek advice from the liquidator before embarking on this action.
Finally, if the business did not work, don't be too hard on yourself. The fact is you tried and millions of other people are not that brave. Well done!
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 includes updates due to Covid-19 For instance 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.
KSA Group which owns this site, will help you fix problems in your business. We won't charge for any initial advice or face to face meetings. We speak in English. We will save you money and your precious time.
We also follow up any meeting with a full "solutions report" which runs on average to 30 pages valuable free advice!! No other practitioner offers this service. In this report we advise on ALL the options and explain them clearly. We advise on a course of action given the information you have given us ( the more information we have the better we can advise!)