Closing down an insolvent company

H

hell36

Guest
My husband has a small business, a Company, of which he and I are the directors/shareholders. Over the last few years he has been struggling, and now we have come to the sad acceptance that he’s not going to be able to trade out of the current problems and the business is gone. He owes money to a lot of people (some of whom have instituted legal proceedings), including Revenue who blocked his bank account a few months ago. There is no way we will be able to pay anyone. I work part-time and my salary doesn’t cover the household bills as it is, and he won’t be entitled to anything from Social Welfare as he’s effectively self employed.

So what should we do? There is no money for anything, not an accountant, liquidator – anyone. How do we close the Company down without incurring costs, and will we be personally liable for the Company’s debts? (to my knowledge no personal guarantees have ever been given). Or do we just wait until Revenue close it down? He’s not trading at all any more.
 
hell36,

This is an awful predicament to be in. Brendan has been doing some brilliant work on options for struggling businesses and the thread I noticed that may help is to do with a section 279 arrangement.

A lot depends on the circumstances of the insolvency. How much is owed to the business and the value of assets.

The good thing is you have ceased trading which is key to recognising the insolvency and is a duty of the directors.

Its rough for the business and for you personally. Look after each other.
 
First of all don't panic. This is going to be a very painfull experience for both of you but one that ye must face. The most important thing to do is act. You have taken the first important decision to cease to trade, albeit maybe a bit late.

Now you must go to your accountant and get the name of a liquidator and go and speak to them. The company may have assets which will pay the liquidators fees. Even if it doesn't there is a procedure for appointing liquidators to insolvent companies. The liquidator will register the company with a new bank account and tax number and wind it down.

You therefore need to bring your accounts upto date eg write off all bad debts, VAT returns, etc and bring this to the liquidator at your initial meeting.

And the very best of luck.
 
Thank you sconhome and paddy 199, and thanks sconhome for "bumping" up the other thread which I had missed.

There is no money at all so a section 279 arrangement is no use if you can pay 0%. Any there is, will be taken by Revenue as they already have a stop on the bank account. He's still chasing a few outstanding debtors which I think will never pay up. Over the years we have loaned the company money which we never got back.

There is some equipment ("heavy" office equipment) which cost a lot of money when originally bought but will probably have little resale value - at the moment this equipment is still in his rented office and I don't know what we would do with it if we had to move it (haven't paid rent in 4 months, explained to landlord that we would move out no prob if they got another tenant but landlord hasn't come near us and I think he will find it impossible to find another tenant).

Should we try to sell the equipment, and is is still the Company's equipment to sell?
Can someone provide a link for appointing liquidators to insolvent companies?

Any other advice appreciated!
 
hell36,

If you type in low cost liquidations you will get some suggestions. I suggest http://www.irishliquidations.ie/ no affiliation. If you could get one through your accountant even better as they will work 'for you'. We have used Michael McAteer of Grant Thorton (previously Foster McAteer) and found him excellent.

Firstly Revenue can't touch the bank account. So the company does have some assets: cash in bank, computer assets and debtors.The liquidator will put order on this. He will try to collect the debts etc and pay his fees, then secured debts and finally unsecurred debts. In this instance, Revenue will be unsecurred as will any monies owed to you. Unsecured creditors are unlikely to get anything in this instance. Directors stand down and the liquidator moves in and takes over the running of the company.

If you have no personal guarantees and have not traded recklessly, you should be fine.

If you hand over debtors to a liquidator, he can generate a refund of VAT by claiming bad debt relief. So don't worry about the liquidator, even in what appears very insolvent instances, he can generate cash.

As I said before, you now need to stand away from the company and let a liquidator wind it down properly. Every thing you do now, will be closely monitored by a liquidator that comes in to see if you acted properly.
 
J.Ryan said:
I think the OP was stating that the Revenue currently have an attachment order on the bank account.
Click to expand...

I think the point he is getting at is that in liquidations the company gets a new bank account so the attachment order doesnt apply to this account and the liquidator can generate cash without it automatically going to the RC
 
Thanks everyone, I'll check out the "low cost liquidations".

Yes Revenue have an attachment order on the bank account - sorry I couldn't remember the term for it. There is probably 2-3k in that bank account so if Revenue haven't been able to get their hands on it then maybe it would cover a liquidator. I don't know what would happen if the liquidator can't get enough money to cover his costs - surely they couldn't expect us to pay up personally?

Must check now to see how up to date the accounts are - "not very" is my guess... I have had no involvement in this business other than on paper as director/shareholder. I suppose we had better get the accounts up to date before looking for a liquidator, or could this delay affect our responsibilities as directors?

Anyone have any suggestions on the equipment, do you think we should start looking to sell it or get a liquidator first? I don't think it's fair on the landlord that the stuff is there rent free, even if they can't rent it out and have not contacted us about it.
 
hell36,

Liquidator now. For god sake do no more - secure the assets for the liquidator and he will sell all the assets, collect all the debts and pay off whatever liabilities he can.

The directors prepare a statement of affairs for a creditors meeting. This is basically a list of your assets and liabilities as best prepared by the directors. The liquidator will give you the proforma for this.

Yes I meant the cash in the bank will go to the liquidator and Revenue can go stuff themselves and get in line like everyone else!
 
You must log in or register to reply here.
Back
Top