A creditor does have a means to wind up a company that has been struck off and dissolved, through applying to have it restored to the Companies House register.
It is likely that the creditor will have noticed the company was dissolved when doing their search on the Companies House website, as they need to obtain the registered address in order to serve the winding up petition. To rectify this, they need to restore the company through a Court Order.
What is the Process to Restore a Dissolved Company?
Firstly, the creditor needs to download and complete form N208 from the government website and there are guidance notes on this from HM Courts and Tribunal Service or if necessary, advice from a solicitor should be sought.
If details of the company’s registered office can be traced, then the form should be sent to the nearest county court that deals with bankruptcy. If it is not clear where to send the form, then the creditor should contact the Royal Courts of Justice for guidance.
There is a £280 court fee and a witness statement should also be provided that includes details of why the claimant has the right to make the application and full details of what to include in this can be found in the government’s Company Restoration Guide, section 4.
If the claim is accepted, the court will then issue an order to restore a company. This will be sent to the creditor who needs to send it to the Registrar of Companies, which will restore the company.
Can Directors Strike off an Insolvent Company?
There have been instances of directors attempting to strike off a business as a means of not paying creditors. However, one uncovered, this will be rejected if the company has unpaid debts, including HMRC liabilities.
Attempting to have a company struck off the register when it is insolvent is highly unlikely to succeed, since notice of this is published as a matter of public record in The Gazette and creditors can take action once it is seen.
This could lead to even more problems for the directors, as their conduct will be investigated and it may mean that they become personally liable for the debts, unlimited penalties and/or they could face disqualification for a period of up to 15 years and at worst, a jail term of up to seven years.
A business must be solvent before it can be struck off and have repaid all the money it owes, including all of its creditors and any directors’ loans. Once it is thought a company may be insolvent, their striking off application will be suspended. In this period, creditors can apply for company reinstatement and following this, start their enforcement action.
HMRC, for example, has a track record of pursuing companies that were dissolved, including up to 20 years after this occured.
Creditors Should Monitor the Strike Off List
Creditors should be aware that insolvent businesses may appear on the struck off register and be ready to object. They have two months to object to a notice in The Gazette and when this period is up, the company is removed from the register.
They should also be aware of compulsory strike off notices, which can be made when a company becomes inactive and, for example, fails to file its accounts. This could also suggest it has run into financial difficulties. Because of Covid-19, however, Companies House is allowing a longer time for filing and is providing more support, including payment plans if appropriate. Businesses can apply for a three month extension to filing if required.
What is the role of the Official Receiver with a Dissolved Company?
If a winding-up order is attempted after a company has been dissolved, the Official Receiver will halt proceedings until the company is reinstated.
However if it is found that the business is in the early stages of applying to be struck off and has only had its name removed from the register prior to dissolution, then it may be restored and the Official Receiver can proceed with the winding up. This is because until formal dissolution, the company remains in existence.
If the winding up has already been advertised in The Gazette the Official Receiver will request via email that the notice is temporarily withdrawn until the company is restored to the register, Once this is done, they will advise that the advertisement can be run again. The Official Receiver will also keep the petitioner’s solicitors informed that an application for restoration is underway.
Attempting to obtain payment from an insolvent company is often extremely challenging and this can become even more so when the business has been dissolved. However, there is a process that can allow creditors a route to winding up.