www.iva.co.uk

Hi, HELP!! I have just had a letter from a Company my limited company owed money to. I shut my buisness down in april as it went insolvant. I had an internet advertising site I had subscribed to for a year and was to make monthly payments, I only had this for 2 months before the business shut. they have sent a letter to opose the striking off and are saying with late payment sharp now owes them over 5k.. they are saying about a hearing and that this could have an affect on the directors?? What does this mean are they trying to get money out of me personally? Am very worried as we have no money and a house already in negative equity? What can happen here?!

If the company has ceased trading and they wish to oppose its striking off, it may be that it is prepared to fund the cost of a winding-up which will benefit you as the matter will be then passed to the Official Receiver to deal with. I cannot see why this would make commercial sense for them to do this, but all you can do is let the process continue to see what the outcome is.

In a liquidation, if it is proven that the directors allowed the company to trade on an incur losses at a time when they ought to have known that the company could not continue, then directors can pick up personal liability for these losses, so you could ultimately be affected if the company goes into liquidation.

I call the solictors I received the letter from and the guy (who was very rude!) said they were puttin gin to wind company I said I have already done this however the creditor is saying they did not receive my letter or the 625a form so as far as they were concerned the company was/is still running which I have now explained it has finished. He was pushing me to make an offer of payment which I can not do he was saying if I did not pay anything it would have a dramatic effect on the directors? Is this right considering its ltd company!
also the company chasing me are an advertising company who I signed a years contract with and arranged to pay monthly. This was paid up to date the day I closed so really they are chasing money for a service I did not use???
I told the solicitor I would call him back today what do you recomened I do?
Thanks [:)]

The whole idea of a limited liability company is that the liability of it's shareholders is limited to the share capital issued to them. Winding it up does not of itself render the directors personally liable for anything (unless they have given guarantees to any creditors).

If the company is wound up (either voluntarily or in Court) that invokes the Insolvency Act 1986, and the liquidator will examine the running of the company and the directors conduct. If, for example, the directors gave assets away (Transactions at an Undervalue) or paid connected (typically family) creditors in preference to others (preferences), then the beneficiaries can face a claim for repayment to the liquidator. There is also a theoretical claim against the directors on the grounds that they have breached their financial duty to the company. Also, if the directors either deliberately or without proper regard to the interest of the creditors caused the company to fail (or contributed to its downfall by running up debts it couldn't pay) this could be fraudulent or wrongful trading and the directors can be required to contribute to the assets of the company.

All these issues are additionally factors that can be taken into account by the liquidator in determining whether the directors ought to face disqualification under the Company Directors (Disqualification) Act 1986. Also, if the directors have failed to keep proper records of the company's trading.

This is a very simplified account of the issues that will be considered by the liquidator, and only you will know whether they are likely to apply in your case. If you think any of them might apply to you you need to be seeking legal advice. It will be unwise for you to go into detail on a public forum.

In a Compulsory Liquidation the liquidator will be the Official Receiver and you will be required to attend his office for interview. This can be a daunting experience for some, and has in the past caused many a director to fund a Voluntary Liquidation instead. However, whether the liquidation is voluntary or compulsory the rules are still pretty much the same and as Melanie has suggested it should not involve you in any outlay (unless the liquidator can establish claims!) if the creditor funds a winding up.

Also, it may simply be that the creditor has credit insurance that will pay out if the company is wound up but won't if it is simply struck off. That has motivated many a compulsory liquidation.

Hope this helps

ian