Bri19876 months ago

Please please PLEASE can we have a forum specifically dealing with insolvency and how to deal with it. The vast majority of businesses end in failure and how people cope with this is vital in enabling them to dust themselves off and try again. Currently questions about insolvency are spread around several forums and it really is time that there was one place that people could go to for help. Cheers Bob  

Mary5 months ago

Hi It only applies if the company enters a formal insolvency and will be based on your PAYE salary only. Gavin  

Fireboy4 months ago

I have £1498 on a credit card and £787 on a catalog. Positive factors on my report You have no Court or Insolvency data You have no accounts in Default or Repossession You have held at least one of your accounts for several years You have very few / no accounts in arrears Your current Telecoms balance is relatively low Negative factors on my report You have made more than a few applications for credit in the past year You have exceeded your credit card limit several times in the past year Your total credit card % utilisation is relatively high Your total mail order % utilisation is relatively high  

Col Minessota4 months ago

Hi WW Lots of questions and points to be considered here. Probably a bit much for a forum so feel free to ring me. Is your Solicitor a specialist insolvency lawyer? On the basis of what you have said in BKY the o.R/Trustee would likely disclaim any interest in the marital home on assumption no/nominal equity. They have three years to realise any interest so could sit back and wait and see whether the equity changes materially but I suspect that is unlikely. Worst case scenario you wife could make an offer to buy out the interest for an (assumed) nomial sum. The flat is different - the 3 year rule doesn't apply and the Trustee might try and attack the trust. Again however it seems like there is little equity and a third party could make an offer to buy out your Trustee. The Bank could appoint Receivers to collect the rent. However regardless of all of this the point is to do a deal with the Liquidators. The argument over the legality of the Statutory Demand is academic if ultimately they do have a claim against you and will move to get a Court Order instead. Personally I would make a settlement offer to them, however small, to put this behind you and avoid BKY and I would think that your solicitor would be recommending something along the same lines. I have had a similar case where I could either accept a small settlement from the Director or make them bankrupt/wait for them to make themselves BKPT and get absolutely nothing. Of course I did a deal.... You could also consider an IVA however I can't see from the information that you have anything to offer - you would therefore probably base it on income contributions of up to 5 years but I don't know what your position is on this. Better to try and avoid personal insolvency full stop if you can.  

Bri19874 months ago

You can't force them to sell their assets to you. If you do buy their assets prior to a formal insolvency event taking place and then they become insolvent the IP/Lqr will investigate to ensure that the price was right and could pursue you if deemed to be a transaction at an undervalue. However as Bushman suggests if it goes into Liquidation you can then do a deal with the Liquidator and might get a better price for it.  

Col Minessota4 months ago

You can claim redundancy pay only without going into formal insolvency.  

Col Minessota4 months ago

Hi everyone, Here’s my situation…I hope someone can help me out with info on how to go about this insolvency. I've read the SpongeBob Plan and sort of understand it. I have outstanding Corp Tax (£6500), VAT (£600) and overdrawn DLA (£14000). (I've had a debt collector appointed by HMRC contact me last week - but no legal action). I'd just like to know if I can go through with the SB plan. Would the appointed court IP or OR look into the overdrawn DLA – ask me for a personal financial account and demand payment? I believe this is where he would get paid from. I don’t understand why the HMRC won’t insist on me paying every single cent back. A private IP firm quoted me £4200. He says this will cover everything and I will not need to pay anything to directly to creditors after this (given what I’ve discussed about my personal finances with him – I’ve gone into detail with him…). I do not have the money to pay the IP so I want to go the SpongeBob route but I am not convinced it’ll end well. I have a young family and really don’t want to end up with a huge debt to pay personally… Am I missing something? Can I even use the Spongebob apporach ? Please help anyone!!! Many thanks, Trader1888  

Bri19874 months ago

I now need to close my Ltd company due to insolvency BUT I haven't supplied my accounts to companies house. I'm about to send off the DS01 forms to companies house to dissolve the company and 'do a spongbob'. The problem that is seriously concerning me is the threat companies house have made of a fine, and the threat to (chased by debt collectors), and if more concern a criminal conviction after 28 days of late filing of annual accounts. From what I'm reading, companies house are going after company directors for a criminal conviction and large fine, IF I can't submit accounts (which I can't due to zero funds to pay the accountant). Many posts I've read say HMRC will object to my company being dissolved, so the hassle of debt collectors putting pressure on me personally by visiting my home address for any fines from companies house, and the potential/risk of getting a court summons for non submission of accounts before the company is dissolved goes up. Does anyone know if I should submit 'best guess' incomplete accounts (companies house are suggesting this), to avoid get a criminal conviction personal as a company director? Also, if the company is dissolved - can I still be given a criminal conviction for non-submission of accounts????  

Matchmaker14 months ago

If you incorporated a personal guarantee in your engagement letter then you would be able to pursue the Director personally. If you haven't done this you might want to think about doing this for future clients. You could make a complaint to the Insolvency Service if you feel aggrieved enough: https://www.gov.uk/complain-about-a-limited-company  

MDG Ltd4 months ago

You could try and find an insolvency practitioner who will give you a free consultaion. Apart from that there is not much that you can do apart from repeating the mantra "the company has no funds and has ceased trading". The debts belong to the company apart from the one you guaranteed personally so you have no liability for them. It is up to the company's creditors to appoint a liquidator but if there is no money that is pointless.  

Watergirl4 months ago

The Insolvency Service released Q3 figures today, revealing a 2.2. per cent rise in business insolvencies despite a drop in the last quarter. Experts squarely place the blame on Brexit, but is there more to these statistics?

Red4 months ago

20 years ago the vast majority of very small businesses were either sole traders or partnerships. Then Gordon Brown while Chancellor made it far more tax-efficient for all these one and two man businesses to be limited companies. Accountants began to advise every mobile hairdresser, dog walker, and window cleaner to form a limited company, pay themselves a salary just above the NI threshold, and to take their personal money out of the company in regular weekly or monthly "dividends". When such businesses operated as sole traders, if things didn't work out then the person involved simply knocked it on the head and got a job. Any debts in the business were their responsibility to sort out as best they could. As a limited company however, things got a lot more complicated. The company is a legal entity in its own right, and has to be "killed off". The Spongebob Plan came into existence specifically to help people in this situation who were erroneously told by professional advisors that the only solution was to pay thousands of pounds to an Insolvency Practitioner. It is very unfair and condescending to call such people "stupid". The majority of businesses fail in their early years and always have done. If you are looking for someone to blame for the situation that has developed look at the accountancy profession, which overall has given appalling advice to small business people regarding being a director of a company and the mechanics of paying dividends.  

Mary4 months ago

This week sees the first major contribution of that positive move, a damning report alleging a very specific banking mis-practice of channelling businesses towards expensive and unnecessary 'turnaround' services. These services, rather than helping businesses to restructure, have contributed instead to their continued dependency on banks and in some cases insolvency. It is the latest in a catalogue of exposed practices that suggest it isn't just lending that's the problem, it's the whole relationship between banks and business.

Bri19874 months ago

I don’t think any competent accountant would advise a client to just take money out of the company and call it a dividend. If declaring a dividend, management accounts need to be drawn up to ascertain the retained profits, and a proper dividend declared with the necessary paperwork. The tax breaks of forming a company depending on certain factors has been very generous in the years gone by. The job of an accountant is to try minimise the tax for their clients. If, after the additional compliance costs a client could save them several thousands in tax each year, advising them to incorporate at the time was the correct thing to do. If a company is in trouble and is on the verge of insolvency, the correct advice an accountant can give to their client is to see an IP. Most accountants cannot give insolvency advice and their insurers will not cover them to give such advice. I wouldn’t advise any professional to give advice that they are not competent, regulated or insured to give. It’s funny that you complain about accountant, because most of those asking about the Spongebob plan have all had useless accountant. They’ve also had useless staff, useless legal advice, a poor location, an unsupportive government, and have been extremely unlucky with every business decision they’ve ever made. They’re never to blame. My point, which you seem to have missed, is that proper planning can often prevent piss poor performance.  

Watergirl4 months ago

ethical PR said: ↑ I think you need to learn to read Toby. Nowhere did the OP mention he was looking to stop being employed and then as you so nicely put it 'sponge off the state". I would much rather someone, got some benefits from the state, while they were starting up a business which would enable them to get off benefits and be self-sufficient.Click to expand... I think you need to learn to understand what you are reading Ethical. He said he was thinking of going self employed and wanted to know what benefits he could get. If he was going to remain employed he wouldn't be looking at benefits would he. I also said, because he hadn't made it clear, that if he was already on benefits/unemployed then he has nothing to lose and just needs to get on with it. Have you ever read any of the posts on the insolvency forum? So many of them are "businesses" that started without enough funding, little or no experience of the field the enteted and they have failed within a year. Encouraging someone to start a business when they don't even have enough money to feed and shelter themselves is frankly irresponsible.  

R2_Amazeballs4 months ago

Hello to all. just wondering if someone can help. I have an old painting business (Ltd) which I am looking to close. A builders merchants has issued a CCJ against my company for just under a grand over a disputed amount. I messed up defence. What is the most advisable option to follow to wind up company . It has no further creditors. I have been advised that I will need to pay 3-5 grand on an insolvency expert ? Any Help appreciated  

Red4 months ago

My limited company went into liquidation 6 months ago owing £1.1m. There was no dividend payable to any creditors once the preferential creditors had been satisfied. Now I have a company named National Collection Services pursuing me stating that they are pursuing me on a personal level as they believe I have breached the Insolvency Act and claim to have evidence of this. I have made some enquiries regarding them and it appears that they have been successful in collecting debts like this before. Can anyone offer any explanation as to the feasability of this as the Creditor they represent was owed over £150,000? I have already received a visit from National Collection Services to discuss this which seemed to me more like an 'information gathering session'. Any thoughts?  

Bri19874 months ago

Death and taxes are the inevitabilities of life. You can also guarantee that some businesses will fail. And while luck plays a part, management hubris and calamitous financial control figure at least as prominently. The question is, what can we all learn? From HMV and Jessops, back through Woolworths and Borders, and fondly remembering C&A and Our Price, business recovery and insolvency practitioners Real Business Rescue have compiled a retrospective that should make any business owner take note.Source: Our Fallen Retailer Friends: Our Top 30

Corrie19994 months ago

Lisa Many thanks for your comment, as my understand was, it either had to be a formal insolvency or via tribunal so I was asking to see if the policy had changed in some respect. Obviously, with the new fees structure for tribunal, you would have to be owed a lot in terms of redundancy for it to be worth it. Have a good Christmas and New Year in the south west. Best Wishes Gavin  

Corrie19994 months ago

Hi, I'm new so please be gentle...my husband and I are both Directors of our limited company. We owe £7,800 to a supplier. They have demanded this be paid within 7 days or they will petition for winding up the company. We also have a £5k overdraft which is OK and another supplier whose account is 2 weeks late but it will be paid (luckily they are very understanding). We have work coming in and so I think we are a company which is having problems at the moment, but can continue to trade. VAT is up to date. We have spoken with an insolvency practitioner and he has suggested an Company Voluntary Arrangement but is this the best course of action? The only assets we have are some tools. Whats the best way to go about this? Many thanks  

MDG Ltd4 months ago

Hello, Mine is a one year old Ltd co. with debts of £15000 in company contracts. No one else is owed any money, but I yet have to file VAT, corporation tax etc,. My company has gone bankrupt and so have I. Creditors keep calling everyday. It is a small company with no assets / no bank balance / it does have an ebay account - which is active - looking at closing it soon. I have no money to pay insolvency practitioners but have been following the Spongebob Plan and will be acting on it shortly. Apart from the advice that I need on the above. I would like to start another company to trade in the same sector. Can I start it immediately or should I wait till my existing company is turned Inactive by Companies House. Also, will any liabilities be transferred from the existing company onto the new company since the director / sector in trading is exactly same. Can I use the same name as well? I would really appreciate if I could get some advice on my specific case. what should be my next move?  

Matchmaker14 months ago

Brennerz said: ↑ Moral outrage? I expressed my opinion on what I believe is right, perhaps you just don't want me to have that opinion. If you actually read through my replies, I mentioned that I could understand taking this route if the debt was much larger. I fully understand why people would take this option, but I clearly explained why I didn't think this was the right option, in my point of view. I shall continue to express my opinions in the insolvency forum, thank you very much. Click to expand... I think that perhaps you completely misunderstand the raison d'être of the "Insolvency Forum" as it to give advice to people who's businesses are insolvent and not to comment on the ethics of anyone who has happened to run aground.  

Fionas_Boy4 months ago

My company that I was/am a 50% shareholder is at the end of a CVL now with all creditors about to be paid in full inc interest. The insolvency practioner (IP) quoted £6k for his services and has now presented a bill for £72k - inclusive of pre-liquidation/ appointment costs at £7K. The IP has now emailed for my consent to close the liquidation and for his fees and enquired if I would like to buy the one remaining debt that belongs to the other shareholder (£109K approx.) I objected to his fees with a list of abnormalities - he never addressed my list but came back stating that to pay all creditors in full he would settle for £25K representing the money he has already drawn and if I don't give my consent he will have a court settle his fees and as the other shareholder also the only remaining debtor of the company has consented to his fees, I will be responsible for the court costs personally. He states he has will not be putting the shareholders £109K debt to the inland revenue as personal income either, and wont explain how he intends to deal with or allocated in the liquidation. I have stated I will accept his fees at £25k in full and final settlement of the liquation fees, he replied that he wont state full and final as if more money is realised he will want the remainder of his £72K. My main question is - in a CVL is it not the body of the creditors who agree to the liquidators fees ? Why am I being put under pressure and intimidated to agree to fees I don't agree with or threatened with court costs, and why is the largest and only debtor (other 50% shareholder & a director) being asked for his consent when it would clearly be in his interest and personal gain to close the liquidation without paying his debt or taking responsibility for it ? My gut instinct is the IP is going to put a charge on the other shareholders house that will disadvantage me and be of personal gain to the IP.  

MDG Ltd4 months ago

I think it is pretty unlikely that HMRC will take any legal action against the directors for £15,000. I would discuss this with your accountant and speak to an insolvency practitioner about your options.  

Matchmaker14 months ago

Newchodge - I'm only saying that should be the case in insolvency (personally I think it should cover sole traders too). But I'm not saying companies that are solvent should be able to have their tax debts Limited. The reasons are all listed above, multiple times - have a read. 'Me and my ilk' as you so charmingly put it, can't be bothered to explain it again to you and your ilk!  

Fireboy4 months ago

Kat Haylock said: ↑ Uploading videos is fine, providing the member uploading/featured in is a Full Member.Click to expand... What incentive is there for an insolvency practitioner to pay to be a full member?!  

Porker4 months ago

Hello all and thank you kindly for taking the time to help me out, I have around 3 months of unpaid salary from a newly formed firm that has employed me as the only employee. This firm has and always had zero assets and capital and is largely based on an idea. Obviously, I have been naive and taken the director's word on good faith regarding delayed salary payments. I do have an employment contract but this is realistically worth nothing as the firm has practically zero assets, so there is no point in taking the limited company to small claims court. These salary payments are now 6 months overdue and the directors keep on saying they are trying to approach external investors to raise capital, which may well be the case, but it is obvious they are getting nowhere. I am aware they would technically be held to the insolvency test but the fact is the firm never had any capital or assets - so it is not just a case of "temporary period of insolvency". They have basically employed my skills and services to do the runaround and hide their intentions behind a limited company structure. There are no imminent invoices etc, basically no sign of cash coming in at any point. My question is: how can I go about proving wrongful trading to transfer liability to the directors? I have previously suggested they declare insolvent - nothing to lose! - so that I can try to claim back SOMETHING of my unpaid salary from the National Insolvency Fund but they have rejected this. Clearly, I believe I have a strong case, but I would like anyone with experience of this to advise on: 1. What lawyers would I approach to assist me in this? 2. How long does it take / what is the expected cost? 3. What are the chances of winning? Thank you again for taking the time to read this.  

Pete_W4 months ago

[content removed by moderator] Given the above is it advisable to enter the business into receivership/insolvency or strike a deal with the third party and pay out of my own personal pocket to put matters to bed and allow me to strike the business off?  

MechExp4 months ago

The Spongebob Plan is completely unaffected and remains best advice for those for whom it is intended; directors wishing to close a limited company which has insufficient funds or realisable assets with which to pay an Insolvency Practitioner. It was always the case that an overdrawn Directors Loan Account was repayable in the event of of a compulsory liquidation. It would now appear that the director will merely have to pay tax on that money instead. As UKCA points out, this is a lot less onerous than potentially having to repay the whole amount. Most people using The Spongebob Plan are in desperate situations and at the end of their tether. A little personal tax liability is the least of their worries, and the advice given in the sticky thread on this forum remains good. Paying £5-8k for an IP to liquidate the company isn't going to make the tax liability go away!  

Col Minessota4 months ago

As we enter what many predict will be the biggest recession in living memory, may I suggest that a seperate forum dedicated to discussion on insolvency and what to do with a failing business might be a good idea? Watching your company slowly going down the pan can be the most desperate of experiences, and the support and practical advice that members of these forums would be able to offer could be invaluable to many. There's no point burying our heads - it's going happen! Just a thought... Bob  

Col Minessota4 months ago

Insolvency

justintime said: ↑ . I mentioned further upthread that it was corrupt for insolvency practitioners to do this. Only assets should be used to pay the liquidator, it is wrong for the money to come from the directors pocket, and it defeats the whole point of being a Limited Company.Click to expand... Unfortunately it is standard practice for insolvency practitioners to demand payment of their fees upfront from company directors in cases where it is doubtful whether sufficient monies will be realised from the disposal of the assets. Not only that; it is also standard practice for many insolvency practitioners to abuse their position of trust and to tell directors of insolvent companies coming to them in good faith for advice that there is literellay no alternative but to appoint an insolvency practitioner to liquidate the company. This of course, is an outright lie, and it was repeatedly being the recipient of this lie that led me to research the options available to directors of companies finding themselves to be insolvent. The result was what has been christened (but not by me!) The Spongebob Plan. Anyone who is advised by an insolvency practitioner that the only way to wrap up the affairs of an insolvent company is to appoint an insolvency practitioner should immediately leave the room in a torrent af abusive expletives.  

Gary19964 months ago

He is entitled to continued to trade using the same or similar name as the Liquidated Company as long as he covered the exceptions to the Phoenix regulations. See here for more information: As long as there was a formal professional valuation of the assets and the Liquidator sold the assets to the 'Newco' at market value and they were/are being physically paid for there is nothing wrong with this either. This information will be disclosed in the Liquidators annual report. However, as you have some concerns regarding the IP's conduct you can raise them direct with him/her or make a complaint via the Gateway here: https://www.gov.uk/complain-about-insolvency-practitioner  

R2_Amazeballs4 months ago

Jeff FV said: ↑ So that they can upload a video, thereby establishing themselves as the expert in that field? Not a bad return for circa forty quid?Click to expand... Which would be in the shadow of the dubious spongebob plan that is pinned to the top of the insolvency section. Lisa has already established herself as an expert in the field. Saying that you need to pay £40 to upload videos to do so, is frankly, insulting.  

MDG Ltd4 months ago

1. Yes you are an employee and need to run a payroll 2. Yes, but you can end up with a tax charge What I would suggest is running a payroll from the start and crediting your salary to your Directors Loan Account (DLA). You don't need to draw the money if you don't need to. One of the common themes in the Insolvency part of this forum is people who have set up a limited company and taken money out without doing a payroll. The result is that when the company goes bust (which I earnestly hope doesn't happen to you) they have to repay the company the money they have taken out, compounding their financial difficulties. Run a payroll from the start. 4. Expenditure made from personal sources is added to your accounts as via your DLA 5. Unless you have other income or HMRC ask you to do a tax return you don't have to do one.  

Corrie19994 months ago

Hi We're do I start I'm in a bit of a pickle about everything and need advice on what to do. I have a ltd company and I'm the sole director of the company and I'm a franchisee which I had 2 franchises in the same company name. I had to close one back in May due to the lack of business as it was making a loss. In the 2 years of trading I had to take out 3 loans to keep the company going also the company who I franchise off allowed me to order stock for both shops I now have outstanding debt with them I've been paying the debt back every month until the other shop closed now I'm finding thing very hard the company now will not let me order stock in to sell for me to get money to pay them back until I pay them the £1000 a month. I've asked them a few times if they can reduce it to help me but won't I also now I have vat and Hmrc debts which I cannot pay. I don't know which way to turn and I'm thinking of just throwing in the towel. I have no money for insolvency And don't know what to do please advise Thank you  

Col Minessota4 months ago

Lisa Thomas said: ↑ I don't think it takes a couple of years for a tribunal award but I do think it can take 6 - 12 months. As regards claiming via Liquidation from memory an employee has 2 years from the date of insolvency to submit their claim. It takes the RPO 2 - 12 weeks to process it, but on average this is about 6 weeks (plus any mitigation period for the notice pay to pass).Click to expand... Can the employee do both? You said earlier that if they use the tribunal method they "get a bit of money back instead of being able to claim most, if not all, of their money" Can they initially use the tribunal method to get the minimum and if the company is later liquidated claim again for the rest of what they are entitled to?  

Col Minessota4 months ago

Hi I always find it frustrating when I read stories like this, as it puts my profession in a poor light. Have you asked the liquidator if he has investigated the sale of the assets. What price were they sold for, was this a fair price and how was the sale price paid. These are basic investigations that the IP should have done. I would also ask how you have ended up as the only creditor, which suggest some form of preference have been made. Ask which creditors got paid in the last 3 months. On the face of it, there is a breach of s216 of the Insolvency Act because of the reuse of Company name. If the IP can't provide this information then you would be within your rights to make a complaint to they licensing body. You may also want to make a complaint to the Insolvency regarding the reuse of the Company Name, https://www.gov.uk/complain-about-a-limited-company In respect of pursuing a claim against the directors these can be very expenses so before so I think you should consider the commercial aspects of this because you don't want the upset of the situation to cloud the overall position. Gavin  

Watergirl4 months ago

Moral outrage? I expressed my opinion on what I believe is right, perhaps you just don't want me to have that opinion. If you actually read through my replies, I mentioned that I could understand taking this route if the debt was much larger. I fully understand why people would take this option, but I clearly explained why I didn't think this was the right option, in my point of view. I shall continue to express my opinions in the insolvency forum, thank you very much.  

Watergirl4 months ago

Oaktree said: ↑ Don - The whole point of creating Limited company status was design to encourage risk taking and set up business to employ people and help grow the economy. So yes I'd argue that there should be some sharing of the risk when a company fails with HMRC on directors loans. After all a company director has lost years of their lives put into building up a business, their income, and has probably racked up huge personal debts to get started or to stay afloat. I'd say the very least Limited company status should be extended to cover is a directors loan account up to a certain amount of day the average U.K. Salary. You say directors say did it I'm not paying my tax, like it's a causal easy thing to do?! If they are in this position they almost certain don't have money whatsoever. They are broke. Then they have months if not years of sleepless nights worrying about HMRC making them personally bankrupt. Have any of you who post on the insolvency forum ever been through this..?Click to expand... I've been there, had to sell the family home (at a time with young kids) so I could pay the business debts and move on. I was a sole trader. So I certainly don't think it's a "casual easy thing to do", I know first hand though that I owed money, it was my risk, and I sacrificed to pay it. That was a good while ago and I bounced back (hope you do to, things are rarely as bleak as you think at time). I have never contemplated going Ltd since though, happy with taking responsibility for my decisions.  

Mary4 months ago

Can someone please help!! I was forced into a insolvency 8-9 months ago without any chance of a re start, I have a personnel guarantee with factors I used which are chasing , the factors forced me into admin due to lack of support from the factors, anyway I have received a letter from there solicitors indicating that they have received a statement from my accountant ( one man band ) and it states my account is overdrawn by over 100k, this is incorrect, what can I do I have no money accept my house any advice would be grateful  

Col Minessota3 months ago
This topic has been discussed elsewhere
- see here