# Small company in trouble



## John (9 Jun 2009)

Hi, we have a small limited company which has been trading since late last year. My wife and I are the directors. We took a small start up loan last March, which has no personal guarantee signed with it. We have a webshop and have approx €550 worth in stock left. It has been a total flop, we owe the bank €15,000 but no other debts. We can't pay the bank and have no sales coming in or any prospect of sales. We personally can't afford to pay liquidators as we've both been made redundant since last year. I don't know how we can get out of this mess. 
Thanks.


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## Sconhome (9 Jun 2009)

Sorry to hear of your troubles. 

Presume you mean March '08 startup? Did you use the loan to buy stock or put in computer infrastructure? These too would be assets. 

You could tough it out with the bank until they liquidate you. Ideally you would get your accountants reports and approach the bank explaining the situation and see what they would advise in order to get your company trading to repay the loan

Problem is duty of care and possible charges of fradulent trading if you are negligent in your actions in running or winding up the company.


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## simplyjoe (9 Jun 2009)

You could get a provincial liquidator to do this for 5-6k. Seems like your best option. Money would be payable up front. By holding on you are just increasing your costs - interest, dealing with revenue, revenue audits, revenue enquiries, etc..


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## mcaul (9 Jun 2009)

The web is not nearly as lucrative as people think - the good news is you have a limited company, so this in effect limits your liability with all creditors including the bank.

If your assets are as low as you say, then it will not be worth any liquidators time to do anything.

The best route maybe is to simply cease trading and do a voluntary strike off - you'll need to get an accountants advice on this, but it can be quite as simple as writing to your creditors e.g. the Bank / revenue commissioners and informing them that the business has not met the intended targets and that you have no option but to cease trading. You will need the bank to write off the loan and give you written confirmation of this. Similar to the revenue. If there are no other creditors, then this will be the easiest and painless route to go.

Enclose a set of basic accounts and a list of creditors and a list of any assets belonging to the company, look for a meeting with bank manager & revenue officials and hopefully they will see you as genuine and allow you proceed with the strike off.


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## viztopia (9 Jun 2009)

is that you again Diego?


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## simplyjoe (10 Jun 2009)

Mcaul I cant agree. You will not receive any written confirmation from a bank that the loan is written off and similarly from the revenue. Which means you voluntarily strike off stating the company has no assets and liabilities when it has or you leave the company open and the CRO/ODCE attack you as a director for non compliance. Your vision of how the Revenue and bank deals with people is skewed. You are listening to words that are not supported by actions. The initial option means that you leave a potential liability and possible problems in the future which may affect your future credit rating, etc..


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## JQ2002 (10 Jun 2009)

mcaul said:


> You will need the bank to write off the loan and give you written confirmation of this. Similar to the revenue. If there are no other creditors, then this will be the easiest and painless route to go.
> 
> Enclose a set of basic accounts and a list of creditors and a list of any assets belonging to the company, look for a meeting with bank manager & revenue officials and hopefully they will see you as genuine and allow you proceed with the strike off.


 
I cannot see the bank simply writing off the loan, if you have a personal guarantee in place, the bank will persue you in any event.

I think liquidation is the best route to get rid of this problem for you, speak to an experienced liquidator, put everything on the table and if needed agree an installment arrangement over a period of months. 

I do think you would need to be budgeting a little more than 5k-6k for the liquidation despite what others say, insolvencies are currently boom time for wannabe liquidatiors who have no experience. I would be budgeting 8k-10k payable over the life of the liquidation which in your case should be no longer than 18 months.


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## mcaul (10 Jun 2009)

JQ2002 said:


> I cannot see the bank simply writing off the loan, if you have a personal guarantee in place, the bank will persue you in any event..


 
The OP has stated that there is no personal guarantee. He has also stated that there are no other liabilities excpt possibly a very small sum owed to revenue.

If he can show the bank that there is no future for the business and that by continuing trading he would be in breach of company law, then it is possible that the bank may assist in an orderly closure of the company by confirming that they have written off the debt.

The company has no cash & virtually no assets so if the directors go the liquidation route and pay for the liquidation from personlal means then this negates the value and meaning of a limited company and also leaves the directors open to claims by other creditors.


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## simplyjoe (11 Jun 2009)

You will get a liquidation for 5-6k. There is very little work involved in a simple case like this. As regards experience I think that if you ensure that the liquidator is a qualified accountant with a Practicing Cert you can have some confidence that the work will be done correctly. Anyone charging any more is engaging in the sort of behaviour that gave Auctioneers and Solicitors a bad name during the boom years. Mccaul - the only time a director leaves themselves open to personal claims is when they dont liquidate or are too slow liquidating.


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## DBRAN (11 Jun 2009)

mcaul said:


> The company has no cash & virtually no assets so if the directors go the liquidation route and pay for the liquidation from personlal means then this negates the value and meaning of a limited company and also leaves the directors open to claims by other creditors.



This is simply not true Mcaul. The only way to effectively protect yourself from creditors and insolvency is to liquidate the company in a professional way. There are indeed ways that a director can be persued but these ways are not easy and require a level of dishonest trading on the part of the directors.

OP - You now need to seek professional advise form an insolvency practishioner. They should be able to give you a clear path to sorting out the problem. You will only find yourself getting more confused and worried  by the conflicting advise given here.


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## JQ2002 (11 Jun 2009)

simplyjoe said:


> You will get a liquidation for 5-6k. There is very little work involved in a simple case like this.


 
Have you actually liquidated a Company to make an assertion like this?


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## jack2009 (11 Jun 2009)

With all due respect to John, there is very little information available about the company available so I dont see how anyone can be coming to any conslusions on the price of liquidating such a company.

However, I do know that liquidators have dropped their fees considerably for various reasons.


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## simplyjoe (11 Jun 2009)

JQ2002 said:


> Have you actually liquidated a Company to make an assertion like this?


 
I dont do liquidations but I have had a client's company liquidated for €5k plus VAT. I have had a solvent liquidation done for €2k plus VAT. Both of these were very straightforward. As regards paying by installments if I was a liquidator I would insist on money up front. JQ are you located in Dublin Area. As I said before Dublin prices!! Who would pay them?


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## JQ2002 (11 Jun 2009)

simplyjoe said:


> I dont do liquidations but I have had a client's company liquidated for €5k plus VAT. I have had a solvent liquidation done for €2k plus VAT. Both of these were very straightforward. As regards paying by installments if I was a liquidator I would insist on money up front. JQ are you located in Dublin Area. As I said before Dublin prices!! Who would pay them?


 
In the current climate, liquidatiors are having to issue an Indemnity to Directors and in some cases enter into installment arrangement.

Yes, I am based in Dublin. Prices in Dublin do vary but currently you do have wannabe liquidatiors quoting very low for liquidations, alot of these do not have any experience in the field. I recently attended a meeting of creditors and the proposed liquidator stood up in the middle of the meeting and announced he didn't want to be liquidatior, little did he know that he had already been appointed.


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## Towger (11 Jun 2009)

JQ2002 said:


> I recently attended a meeting of creditors and the proposed liquidator stood up in the middle of the meeting and announced he didn't want to be liquidatior, little did he know that he had already been appointed.



Would this have been a meeting the Viper Debt Recovery and Repossession Service Ltd also attended?


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## mcaul (11 Jun 2009)

DBRAN said:


> This is simply not true Mcaul. The only way to effectively protect yourself from creditors and insolvency is to liquidate the company in a professional way. There are indeed ways that a director can be persued but these ways are not easy and require a level of dishonest trading on the part of the directors.
> 
> OP - You now need to seek professional advise form an insolvency practishioner. They should be able to give you a clear path to sorting out the problem. You will only find yourself getting more confused and worried by the conflicting advise given here.


 
I was purely answering based on the OP's post - he states that the ONLY creditor is the bank at circa €15k and that stock is less than €500, therrfore in this case it is best to look for a voluntary strike off after getting the bank to agree to write off the debt rather than the expense of a liquidation.

If there were other debts / assets, then it is a totally different story and liquidation would be the only route but where there is just a single creditor and no realisable assets in the company and the directors themselves have little or no means to pay for a liquidation or for any debt the company has, then it is worth pursuing the voluntary strike off route. €15k is not a lot to the banks and can be written off at area management level if the story stacks up.


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## JQ2002 (11 Jun 2009)

Towger said:


> Would this have been a meeting the Viper Debt Recovery and Repossession Service Ltd also attended?


 

No, although heard about that....

It was another Company that an unknown and unexperienced liquidator was trying to organise. He ended up leaving the Director on his own in front of a row of creditors...meeting was evenutally adjourned and the accountant brought back when he was told of his duties...I think he'll seek proper advice next time!


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## simplyjoe (11 Jun 2009)

JQ2002 said:


> In the current climate, liquidatiors are having to issue an Indemnity to Directors and in some cases enter into installment arrangement.
> 
> Yes, I am based in Dublin. Prices in Dublin do vary but currently you do have wannabe liquidatiors quoting very low for liquidations, alot of these do not have any experience in the field. I recently attended a meeting of creditors and the proposed liquidator stood up in the middle of the meeting and announced he didn't want to be liquidatior, little did he know that he had already been appointed.


 
Was not aware that installment arrangements were being used. Sign of the times alright. I agree the liquidator should have experience. Some are just reading how to do it from websites and such like. The guy that charged my client is doing liquidations for at least 6 years and has completed well over 150.


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## jack2009 (11 Jun 2009)

I would not take any comfort in knowing how long or how many a liquidations a person has done.  I know of a few liquidators practicing for over 20 years and still too lazy to stay up to date with changes in legistllation etc and that is why their fees are so high.


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## oopsbuddy (12 Jun 2009)

JQ2002 said:


> I recently attended a meeting of creditors and the proposed liquidator stood up in the middle of the meeting and announced he didn't want to be liquidatior, little did he know that he had already been appointed.



AFAIK, a liquidator must consent to act or there is no appointment.


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## jack2009 (12 Jun 2009)

That is true, but he gives the consent in writing to the shareholders before the Creditors meeting.  The liquidator is appointed before the creditors meeting and will remain the liquidator unless the creditors successfully appoint an alternate liquidator.


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## JQ2002 (12 Jun 2009)

The consent to act does not appoint the Liquidator. However, the non existence of written consent of the liquidator to his appointment deems any appointment void.


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