Company strike-off and dissolution

A limited company is dissolved by striking it off the Companies House register, after which it ceases to exist. This blog provides you with information and advice on what you need to know about dissolving a company.

Business is tough, and it’s a hard fact that there are many closures each year. In fact, in 2020 to 2021, there were nearly 500,000 dissolutions in the UK alone, an increase of nearly 20% on the year before. With that backdrop, it is not surprising that Director’s and business owners are searching for the right advice on how to close down their company.

We have helped hundreds of businesses over the past year bring their business to a close and protect any personal exposure they may have due to any liabilities connected with their business.

Before applying to strike off your company.

To effectively close your company, you have certain duties to uphold.

From the date of dissolution, the company’s bank account will be frozen. The Crown will inherit the account’s credit amount and other unencumbered assets. You will have to re-establish the corporation to get anything back.

There are also protections in place for people who may be affected by a company’s dissolution. If your company has Creditors, members, employees etc you should notify them all before filing, since they may object to the company being struck off.

You will need to conclude the affairs of the company, such as ceasing to trade for 3 months.

You will also not be able to dissolve your company if it is subject to any insolvency proceedings such as liquidation or where there has been a petition presented but has not yet been dealt with.

In such an event where you are not able to dissolve a company or are unsure of what ramifications you may face, we implore you to contact us today.

What Possible Ramifications Could I Face?

It can be very easy for people to bury their heads in the sand, especially at the prospect of facing mounting debt pressures. However, this will only lead to the situation and any ramifications worsening.

As a Director, dissolving your company can have specific implications if:

  • You Received a Bounce Back Loan or CBIL,
  • The Company is insolvent,
  • Director’s have signed Personal Guarantees, and
  • Director’s Loan Accounts are overdrawn.

If you obtained a CBILS or BBLS Loan

As a result of the abuse of these programmes, the government has enacted new legislation. This measure makes it possible to investigate current and former corporate Directors.

The Insolvency Service might use this to strip a limited company of whatever protection it offers, making former Directors accountable for the business’s obligations. If the corporation received a CBILs/BBLs loan, following the pandemic, this is extremely likely.

If you have signed a Personal Guarantee

For business financing, Directors are frequently required to sign a Personal Guarantee. This will be used to reclaim the debt if you fail to make payments or default on the loan.

Any previous repayment arrangements become insignificant if you fail to repay the debt or your company goes insolvent. This implies you are responsible for the entire loan amount, not just the monthly instalments.

Everyone who signed is responsible, and Creditors have the right to demand repayment upon default or insolvency. You are jointly accountable if you and another person signed the Personal Guarantee. If the other party fails to pay, your Creditor can pursue you for the full amount.

If payment is still not made, the Creditor can submit a Statutory Demand and declare you bankrupt if you don’t have the funds to pay. This puts your personal assets such as your home in danger.

If you have taken out a loan from your firm

A Director’s Loan Account (DLA) keeps track of transactions between the board of Directors and the company. The loan account gets ‘overdrawn’ when a Director takes more money out of the firm than they put back in.

This means that the Director will be liable for any money taken out of the company and when the company becomes insolvent or ceases to trade, the Insolvency Service or Insolvency Practitioner appointed can pursue the Director personally.

Get the right advice

Before you consider striking off and dissolving your company, discuss your situation with one of our Business Specialists. For years we have helped many businesses recover and resolve financial issues as such, we have even written a book around SME Debt Problems which you can download by clicking here.

Contact our Business Specialists on 0330 159 5820 or email us at [email protected], alternatively submit a request a call-back form and a member of our team will be in touch as soon as possible.

 

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Your first consultation with us is completely free and you are under no obligation to proceed with us. However, it involves a thorough financial review and a tactical assessment of your various alternatives. We are assured you will leave the meeting with a clear understanding of your options and possible outcomes.

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Bell & Company is not allied to any financial institutions, agencies or outside bodies. This is one of our greatest strengths. It means that, unlike others, we are able to provide impartial advice that is in each client’s best interest and to operate scrupulously on their behalf, free of outside interference.

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