The Coronavirus pandemic continues to impact thousands of businesses across the UK.
Regardless of whether your company was struggling before COVID-19 or the difficulties brought on by the virus have caused new problems for your cash flow, it’s crucial to immediately seek help from a licensed Insolvency Practitioner (IP).
The UK Government has implemented several assistance schemes and packages designed to help struggling companies in recent months. Still, much of this support doesn’t apply to those directors who are being paid in dividends.
Here at Future Strategy, we can offer a range of procedures to help your firm bounce back, which may involve repaying creditors through affordable monthly installments, or restructuring the business with the help of a third party.
If you’re insolvent or you think your business is getting into trouble, we can also help you close your limited company, which will allow you to make a fresh start.
How do I close my limited company?
Whether or not COVID-19 has adversely affected your company, deciding to close it depends on several factors and your motivation for wanting to do so.
Perhaps you can no longer afford to pay your debts, or the directors have agreed on closure?
You may be preparing to retire, want to free up assets from an existing company to fund a new venture, or want to close a subsidiary company that no longer serves a purpose?
Or simply, the business may not be working out as you’d hoped. For example, maybe it’s not as profitable as you had planned, or your fellow directors might not share your vision for the future?
Whatever your reason, we are here to help. Below are some options if you think your business needs to close or is unlikely to survive COVID-19:
What is a Company Strike Off?
If you can pay your bills, then usually the cheapest and most efficient way to close a company is through a Company Strike Off.
You ‘Strike Off’ a company by applying for a DS01 form. This is known as a Voluntary Strike-Off.
A Compulsory Strike-Off happens when a third party petitions for the closure of your company. This third party is usually Companies House and sparked by the failure to return accounts or annual statements.
If your company finds itself in either situation, it is possible to rescue the situation or navigate the process of a Strike-Off.
However, we highly recommend working with experts to do this.
What is a Company Restart?
If you’re facing the worst-case scenario of your business being unable to pay its bills, one option is to close your company and start again. Still, the law must be carefully considered as strict legal boundaries define what you can and can’t do.
This legislation is in place to stop directors dumping one company and simply starting another to escape debts (and the consequences).
When your failing company has legally closed, you can continue to trade in a new business. There may even be the possibility of starting a new company with assets of the old, bought for the new business at more affordable costs.
Find out more about Company Restarts.
What is Administration?
Pre-packaged or traditional company administration will halt all legal action against a company. This will also stop creditors from winding up the company and give you time to explore your options.
An administrator (also known as an Insolvency Practitioner) will be called in to see whether the company can continue trading or be sold so that new owners can turn the company around. If it can’t be sold, the company will be closed down and the assets sold to cover its financial responsibilities.
At this stage, you may also consider voluntary liquidation, which will give you time to prepare to handle obligations such as personal guarantees, redundancies, and lease terminations.
What is Liquidation?
When a business finds itself in too much debt to recover through recovery procedures such as financing, administration, or a Company Voluntary Arrangement (CVA), it may be that a Creditors’ Voluntary Liquidation (CVL) is the only viable course of action.
When your company is in liquidation, no legal proceedings can be taken against it. Providing you have no personal liability for your company’s debts, your creditors will be unable to take any further action against you.
Find out more about Liquidations.
What is Dissolution?
Voluntary dissolution can be used to close down your limited company under specific circumstances.
The process includes removing the business from the Companies House register, on which all official company data is displayed. Once the name is removed from this register, it will no longer legally exist.
The most important thing to remember is that you cannot dissolve your business if it has significant debts to its name, and you must meet several requirements.
Find out more about Dissolving a Limited Company.
If you would like to know more, contact us today. Our initial consultation is FREE. Here we will assess the viability of the business and offer advice on appropriate strategies.
We will also advise on the solution options available concerning your specific situation and requirements. These solutions are wide-ranging, cost-effective, and flexible.
Note – You might also be interested in reading this post that looks at how to dissolve a limited company with a bounce-back loan or this one looking at the process of closing a limited company with debts.