Get in touch with the insolvency practitioners at AABRS for a free, no-obligation and confidential consultation today. What Happens to Debts when a Company is Dissolved? Get Advice with No Obligation. Our mission is to help company directors find the best possible solutions. Whether you want free advice, or assistance with a formal insolvency procedure, make contact by calling You can use the live chat during working hours.
No, liquidation and dissolution are two different processes. Dissolution is a way to achieve company closure in situations where no debt is present, or where any outstanding debt and other liabilities can be settled in full within 12 months.
Liquidation is different. If your company is unable to pay off what it owes, liquidation is likely to be the most appropriate option for you. Liquidation involves extracting the assets from a company, selling these to realise as much money as possible, and putting these towards paying off any outstanding debts.
Liquidation can only be entered into with a licensed insolvency practitioner who will oversee the whole process on your behalf. As well as your company being solvent, there are other conditions that must be met before a company is eligible for dissolution. Your company must:. The process of dissolving your company is done through submitting a DS01 form which must be signed by a majority of the directors or all if there is only one or two.
Alternatively, this process can now be completed online through the Companies House website. A notice will then be placed in the Gazette announcing your decision to dissolve the company. Your company will officially be dissolved 3 months after this notice is published, providing no objections have been made. The Gazette will then run a final notice confirming the dissolution of your company.
Following the dissolution of your company, you are required to keep any records and documents relating to the business for 7 years. Anyone can object to the proposed dissolution of your company. If your company owes money, then you should expect your creditors to submit an objection to your application. If an objection is upheld by the Registrar then the dissolution will not be allowed to go ahead.
You should be aware that a creditor can apply for a court order to restore your company to the register even after dissolution if you have evaded paying them. This is why it is crucial that you inform all interested parties of your intention to dissolve the company and ensure all creditors are fully paid.
There may also be a reason why you, as director of the company, have to halt the proceedings. You must retract your application if your company changes its name, continues to trade, or is made insolvent.
If this happens, you must complete form DS Are you eligible to claim director redundancy? While dissolving your company may seem like a straightforward process, caution must be exercised. If you provide false information in your application, deliberately or otherwise, or fail to notify an interested party of your decision to dissolve, the consequences can be severe. Where a director applies to Companies House to strike their company off the register, without having dealt properly with debts, it is likely that creditors commonly HM Revenue and Customs HMRC will lodge an objection to the strike off.
You have a legal responsibility to inform interested parties about your decision to strike off. Since the attempt will be advertised in the Gazette, it will become public knowledge anyway. HMRC in the past has reciprocated by automatically objecting to the striking off application if it has not been notified of the strike off. You cannot dissolve a company if threatened with insolvent liquidation such as a winding up petition. Ignoring this can lead to prosecution and or a fine.
Where a company attempts to dissolve without having addressed existing legal threats, remember you must write to them as part of the application to strike off.
Where a company attempts to dissolve without having addressed existing legal threats, your company will likely be forced into compulsory liquidation by the court. This will put you in a trickier situation than having chosen voluntary liquidation, because the proceedings will be carried out by a court or creditor-appointed insolvency practitioner, rather than your own.
You may also be held personally liable as a director for not putting the interests of the creditors first. These cookies ensure basic functionalities and security features of the website, anonymously. The cookie is used to store the user consent for the cookies in the category "Analytics". The cookies is used to store the user consent for the cookies in the category "Necessary".
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