If you have made the decision to strike off your company by submitting the DS01 form to Companies House, you may find your request blocked. This is typically because you have outstanding creditors who stand to lose the money your company owes them should your company be struck off and removed from the register. This could be a supplier chasing an unpaid invoice, or HMRC wanting to collect unpaid tax. A company has two months from the date your strike off application is advertised to submit their objection. If Companies House holds up their objection then your application for strike off will be suspended, and your company will remain active.
So, if you find yourself in this position, what are your next steps?
In this situation there are three main options open to you.
- Your first option is to simply submit the application again and hope that your creditor does not object this time around. You may be lucky and your application may slip under the net, however, you should be aware that your company can be restored to the register even after it has been struck off should a creditor be able to give a valid reason for this. The chances are, however, that now you are on your creditor’s radar and they are aware of your intention to make away with your company, they will be keeping a close eye on your actions and will be ready to step in with an objection.
- If your application has been suspended due to a small outstanding debt, you could pay off your creditor and once this has been settled simply submit the strike off application again. As your company now does not owe anything, there is no reason for your application to be rejected. This route is obviously dependant on the size of your company’s debt and your ability to clear this balance.
- Extreme caution must be taken, however, if your company owes multiple amounts to a variety of companies. Unless you have the funds the clear the entirety of your debts, you should steer well clear of making any payments to creditors prior to striking off your company. For example, if you have a number of creditors but only one of these has objected to your company’s strike off, you cannot just pay this one debt off and then proceed to dissolve your company. This type of action is known as making a preference payment and is likely to be viewed as wrongful trading.
- Your final option is to enter into a formal liquidation procedure to bring about the end of your company. This will typically take the form of a Creditors’ Voluntary Liquidation (CVL). During a CVL an insolvency practitioner will be appointed to manage the affairs of the company and close it down. Any assets in the company will be liquidated and distributed to outstanding creditors on a proportional basis. Any debts left outstanding will be written off as part of the process.
A licensed insolvency practitioner will ensure the company is closed down in the correct way. Following the liquidation, you do not need to worry about creditors petitioning for your company to be reinstated, instead you can rest assured that the company has been formally shut down and you can move on.
If you are considering closing down your company, you should make it a matter of priority to contact a licensed insolvency practitioner who can give you the help and advice you need to make the best decision for you and your company. Real Business Rescue has a nationwide team of licensed insolvency practitioners who can talk you through your options and help you decide on your next move. With 55 offices stretching from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK. Call our expert team today to arrange a free no-obligation consultation.