Voluntary Cessation Of Trade & Creditors
Thread Starter
Joined: May 2000
Posts: 16,980
Likes: 15
From: From far, far away...
Voluntary Cessation Of Trade & Creditors
Coming up for 12 months since the company I was working for last year made me redundant and ceased trading. They have not gone into liquidation and no-one has wound them up.
They owe me quite a bit of money as well as some other creditors. They also have some money in the bank through sale of assets.
Problem is that the directors are making no effort whatsoever to come to an agreement with the creditors. They only say that they don't agree with the amounts claimed (not mine) and that some creditors are asking for too much to settle.
They have a statutory duty to minimise the loss to their creditors, so after what amount of time could it be said that they are being negligent in their duties and report them to the DTi? Or is there any other action I could take? Is there any action they should be taking that I can ask for proof of? I have asked for a statement of accounts but not received one.
I stand to get at least 10p in the pound & that still equals a good sum, worth hanging out for, but I can't afford to pay to have them wound up nor is there any point in getting a CCJ as my debt is not in doubt and all creditors will be treated equally - I have had the £800 that I am due as a preferential creditor.
I am loathe to spend money on this as its already costing me thousands
They owe me quite a bit of money as well as some other creditors. They also have some money in the bank through sale of assets.
Problem is that the directors are making no effort whatsoever to come to an agreement with the creditors. They only say that they don't agree with the amounts claimed (not mine) and that some creditors are asking for too much to settle.
They have a statutory duty to minimise the loss to their creditors, so after what amount of time could it be said that they are being negligent in their duties and report them to the DTi? Or is there any other action I could take? Is there any action they should be taking that I can ask for proof of? I have asked for a statement of accounts but not received one.
I stand to get at least 10p in the pound & that still equals a good sum, worth hanging out for, but I can't afford to pay to have them wound up nor is there any point in getting a CCJ as my debt is not in doubt and all creditors will be treated equally - I have had the £800 that I am due as a preferential creditor.
I am loathe to spend money on this as its already costing me thousands
Scooby Regular
Joined: Sep 1999
Posts: 6,095
Likes: 0
From: £1.785m reasons not to be here :)
Puff - If they have ceased trading there is no obligation upon the Directors to wind the company up voluntarily.
In ceasing to trade they have mitigated the creditor liability, and that is all they are required to do.
If there are insufficient funds/assets to pay for the costs and expenses of liquidation then no insolvency practitioner would accept the appointment anyway, unless the directors personally underwrote the fees.
Knowing a bit about this particular case, however, I suspect they are procrastinating due to the asset transfer as this may have been at undervalue.
Having said that, the assets are not that great anyway.
It sucks, but thats the way it is.
As a contracting creditor as opposed to an employee, you may get nothing from the DTi anyway under the Employment Rights Act.
What you need to do is find a creditor who is willing to petition the court for a winding up - the official receiver would then be appointed regardless of the funding position.
cheers
D
In ceasing to trade they have mitigated the creditor liability, and that is all they are required to do.
If there are insufficient funds/assets to pay for the costs and expenses of liquidation then no insolvency practitioner would accept the appointment anyway, unless the directors personally underwrote the fees.
Knowing a bit about this particular case, however, I suspect they are procrastinating due to the asset transfer as this may have been at undervalue.
Having said that, the assets are not that great anyway.
It sucks, but thats the way it is.
As a contracting creditor as opposed to an employee, you may get nothing from the DTi anyway under the Employment Rights Act.
What you need to do is find a creditor who is willing to petition the court for a winding up - the official receiver would then be appointed regardless of the funding position.
cheers
D
Scooby Regular
Joined: Aug 2000
Posts: 8,897
Likes: 4
From: Newmarket Suffolk
James
If it is over £750, present a written demand in the prescribed manner - serve a Statutory Demand on them under Sections 123 (1)(a) of the Insolvency Act 1986 - this is a precursor to a Winding Up order and only costs about £1 for the form (I have some in my desk
).
It is a legal document, but you can serve it yourself. They CANNOT ignore this - if they do, you can petition to have them wound up on the basis that the company is unable to pay its debts - which they will not want as control will be taken away from them. I've used it often and it is a VERY effective debt recovery tool.
If you want more info, call me tonight at home after 1930 - on 01440 730257
If it is over £750, present a written demand in the prescribed manner - serve a Statutory Demand on them under Sections 123 (1)(a) of the Insolvency Act 1986 - this is a precursor to a Winding Up order and only costs about £1 for the form (I have some in my desk
).It is a legal document, but you can serve it yourself. They CANNOT ignore this - if they do, you can petition to have them wound up on the basis that the company is unable to pay its debts - which they will not want as control will be taken away from them. I've used it often and it is a VERY effective debt recovery tool.
If you want more info, call me tonight at home after 1930 - on 01440 730257
Scooby Regular
Joined: Sep 1999
Posts: 6,095
Likes: 0
From: £1.785m reasons not to be here :)
Hi Dave - nice to have you back
Puff was hoping not to incur any more cost. Stat demands are good (unless written denial is made) but that doesn't help him as far as the costs of winding up are concerned.
Not 100% about down south, but the demand must be served by Sheriff Officers in Scotland to be able to be founded upon in any S123 petition - again more cost.
Presumably similar applies in England/Wales?
Puff was hoping not to incur any more cost. Stat demands are good (unless written denial is made) but that doesn't help him as far as the costs of winding up are concerned.
Not 100% about down south, but the demand must be served by Sheriff Officers in Scotland to be able to be founded upon in any S123 petition - again more cost.
Presumably similar applies in England/Wales?
Scooby Regular
Joined: Aug 2000
Posts: 8,897
Likes: 4
From: Newmarket Suffolk
Diablo
Hi, just passing through
Scottish law is indeed different. I.A. 1986 is primarily England and Wales, and you can file the Statutory Demand yourself - done it a number of times
You are right about cost, but filing the SD only costs the form, and that will get them to sit up and take notice - you accompany it with a letter saying "this is an important legal document, do not ignore it, consult your legal adviser immediately - failure to do so within 21 days will result in a Winding Up petition being made against your company" or words to that effect. They of course do not know that you might not want to fund the petition.......
If you want to get someone else to sponsor the petition, if you serve the Statutory Demand and they ignore it, you may be able to get the Official Receiver to wind them up for you as being in the public interest.
I have also found that to contact the investigation branch of your local Inland Revenue or Customs & Excise office (VAT) and tell them that you believe there may be evidence of large scale tax/VAT evasion is always a good way to get them to descend on the company for you
Contacting the investigation branch of Companies House with a suspicion of wrongful trading/director abuse is always another irritant If found guilty they can be disqualified from holding directorships in future
DTI I have always found to be ineffective - I have given them grief about a number of insurance companies that were not paying their debts in the past and asked them to wind them up, and they don't seem very interested.
As you can see, doesn't pay to pi$$ me off if you are a limited company and owe me more than £750
Hi, just passing through
Scottish law is indeed different. I.A. 1986 is primarily England and Wales, and you can file the Statutory Demand yourself - done it a number of times
You are right about cost, but filing the SD only costs the form, and that will get them to sit up and take notice - you accompany it with a letter saying "this is an important legal document, do not ignore it, consult your legal adviser immediately - failure to do so within 21 days will result in a Winding Up petition being made against your company" or words to that effect. They of course do not know that you might not want to fund the petition.......
If you want to get someone else to sponsor the petition, if you serve the Statutory Demand and they ignore it, you may be able to get the Official Receiver to wind them up for you as being in the public interest.
I have also found that to contact the investigation branch of your local Inland Revenue or Customs & Excise office (VAT) and tell them that you believe there may be evidence of large scale tax/VAT evasion is always a good way to get them to descend on the company for you
Contacting the investigation branch of Companies House with a suspicion of wrongful trading/director abuse is always another irritant
If found guilty they can be disqualified from holding directorships in future DTI I have always found to be ineffective - I have given them grief about a number of insurance companies that were not paying their debts in the past and asked them to wind them up, and they don't seem very interested.
As you can see, doesn't pay to pi$$ me off if you are a limited company and owe me more than £750
Scooby Regular
Joined: Sep 1999
Posts: 6,095
Likes: 0
From: £1.785m reasons not to be here :)
Originally Posted by Dave T-S
Diablo
Hi, just passing through
Scottish law is indeed different. I.A. 1986 is primarily England and Wales, and you can file the Statutory Demand yourself - done it a number of times
Hi, just passing through
Scottish law is indeed different. I.A. 1986 is primarily England and Wales, and you can file the Statutory Demand yourself - done it a number of times
If you want to get someone else to sponsor the petition, if you serve the Statutory Demand and they ignore it, you may be able to get the Official Receiver to wind them up for you as being in the public interest.
I have also found that to contact the investigation branch of your local Inland Revenue or Customs & Excise office (VAT) and tell them that you believe there may be evidence of large scale tax/VAT evasion is always a good way to get them to descend on the company for you
[quote]
Contacting the investigation branch of Companies House with a suspicion of wrongful trading/director abuse is always another irritant
If found guilty they can be disqualified from holding directorships in future Never found that to be of any use
Had a few directors disqualified in my time though )
DTI I have always found to be ineffective - I have given them grief about a number of insurance companies that were not paying their debts in the past and asked them to wind them up, and they don't seem very interested.
As you can see, doesn't pay to pi$$ me off if you are a limited company and owe me more than £750
D
Trending Topics
Scooby Regular
Joined: Aug 2000
Posts: 8,897
Likes: 4
From: Newmarket Suffolk
Diablo
Sorry, badly worded bit on my part. What I meant was yes indeed I.A. 1986 applies to England, Wales and Scotland, just that the way some parts of it are executed in Scotland is different to England and Wales.
Yep, you can serve Statutory Demand yourself providing you are the debtor. It can be assigned too. VERY satisfying serving one, I can tell you
The I.A 1986 is interestingly worded as to the provisions of S. 123. A company is deemed to be technically insolvent if it is unable to pay its debts.
If you serve a correctly executed Statutory Demand on a company and they ignore it, the Act assumes it is *unable*, never mind the fact it may be just *unwilling*, to pay its debts, and thus by default it will be technically insolvent for the purposes of the Act even though it might have loads of cash, shareholders equity and be healthily solvent.
It's a nasty little trap you can lead those that are unwilling, but not unable, to pay their debts into, and once they are locked into it they are trapped. Played this one a number of times and it is fun If a Statutory Demand is made and ignored and the Official Receiver is made aware of that then they are obliged to act, as technically the company is insolvent and the OR cannot allow a company to trade when it is insolvent.
Also worth noting that under S 268 of the I.A. 1986 you can also serve a Statutory Demand against individuals in the same way, as a precursor to presenting a petition for their bankruptcy
Sometimes I love my job LOL
Sorry, badly worded bit on my part. What I meant was yes indeed I.A. 1986 applies to England, Wales and Scotland, just that the way some parts of it are executed in Scotland is different to England and Wales.
Yep, you can serve Statutory Demand yourself providing you are the debtor. It can be assigned too. VERY satisfying serving one, I can tell you
The I.A 1986 is interestingly worded as to the provisions of S. 123. A company is deemed to be technically insolvent if it is unable to pay its debts.
If you serve a correctly executed Statutory Demand on a company and they ignore it, the Act assumes it is *unable*, never mind the fact it may be just *unwilling*, to pay its debts, and thus by default it will be technically insolvent for the purposes of the Act even though it might have loads of cash, shareholders equity and be healthily solvent.
It's a nasty little trap you can lead those that are unwilling, but not unable, to pay their debts into, and once they are locked into it they are trapped. Played this one a number of times and it is fun
If a Statutory Demand is made and ignored and the Official Receiver is made aware of that then they are obliged to act, as technically the company is insolvent and the OR cannot allow a company to trade when it is insolvent.Also worth noting that under S 268 of the I.A. 1986 you can also serve a Statutory Demand against individuals in the same way, as a precursor to presenting a petition for their bankruptcy
Sometimes I love my job LOL
Last edited by Dave T-S; Jul 29, 2004 at 01:37 PM.
Scooby Regular
Joined: Sep 1999
Posts: 4,037
Likes: 0
From: Bedfordshire
Puff,
Well I had a very similar situation last July. I wish I had gone the stat. demand/ winding-up route as it may have been more effective. To cut a very very long story short, owed £4k when made redundant, no money came, went to tribunal won case, still no money, meantime company was folded and assets moved to another company which was then done again (two phoenix moves!) several complaint letters to dti could have pursued the legal angle (going after directors personally) but had already run up big legal bills.
Bottom line, forget tribunals - they only serve a judgement, dti, completely uninterested and a bunch of a$$holes IMHO, quickest route is probably a winding-up order, do not f**k about if these people owe you money shut them down and take a gamble, the longer it goes on the less cash you will see. Trust me Im not a lawyer just someone who has had alot of legal tussles!
good luck
Gary
Well I had a very similar situation last July. I wish I had gone the stat. demand/ winding-up route as it may have been more effective. To cut a very very long story short, owed £4k when made redundant, no money came, went to tribunal won case, still no money, meantime company was folded and assets moved to another company which was then done again (two phoenix moves!) several complaint letters to dti could have pursued the legal angle (going after directors personally) but had already run up big legal bills.
Bottom line, forget tribunals - they only serve a judgement, dti, completely uninterested and a bunch of a$$holes IMHO, quickest route is probably a winding-up order, do not f**k about if these people owe you money shut them down and take a gamble, the longer it goes on the less cash you will see. Trust me Im not a lawyer just someone who has had alot of legal tussles!
good luck
Gary
Thread
Thread Starter
Forum
Replies
Last Post
