Liquidating a company - advice? (Help)

CompanyDirector

Hi there,

Would appreciate some advice here - obviously none of which is binding but some pointers would be appreciated. (pm if needs be?).

I have been a company director with another family member for several years. For many years the company made very little in terms of revenue/profit. We both had some fairly extreme personal circumstances in 2006 and 2007 and ended up not paying attention to our accounts, paying tax, vat etc and taking out whatever we earned without putting money aside for tax. We really have screwed up. However, in 2006 and 2007 we both earned much more through the company and the revenue went up.

Our only creditor is the Revenue and we owe a substantial amount - we've both tried to raise the money personally but have been rejected by our mortgage companies/banks. We made an offer to the Revenue to repay a small amount each month but they have rejected it and told us to liquidate. The company has next to no assets - a couple of computers and that's it.

Not having any experience of this, we don't even know where to start to be honest and are scared witless (and can't believe we got into this position). We both have a limited income over the next six months (and are obviously anxioius about the current economic climate).

So, my questions are:
a) how do we find a liquidator?
b) what can we expect to have happen?
c) what is the likelihood of being prosecuted for negligent trading?
d) in addition to finding a liquidator do we need to find a) a new accountant or b) a solicitor. How do we go about finding these people?
e) In terms of the amount we owe: are they likely to seek the full amount in repayment and is it known that they'll accept a monthly payment over a period of time - say five or ten years? Or could they put a lean on our homes?
f) Presumably this is going to affect our credit rating? If so for how long? Would it mean our current bank/mortgage lender will call in their loan or would they let it continue? Same with credit cards? (ie I would expect we wouldn't be able to get any new credit but any existing debt be called in).
g) We're not going to be company directors any more :-) However, in terms of finding permanent employment, would this have to be disclosed? How would we handle it (I appreciate that this may not be the right forum for that question).
h) in terms of liquidation costs what's a reasonable amount if we appoint a liquidator - will there be court costs, any other costs- how much are we going to need to liquidate the company?

Thanks in advance anyone - pointers on how to get the right advice would be very much appreciated.

Bandara

Hi

I know its not the answer your looking for but I would be going straight to your solicitor / accountant to ask the questions you want answered.

Any info you get here cannot be trusted and is not a suitable way of you dealing with the issue at hand. (And I mean that in a genuine way, as your situation really requires professional advice with all aspects of the situation divulged).

Good luck with it, I hope it works out for you.

Darragh29

CompanyDirector wrote: »

Hi there,

Would appreciate some advice here - obviously none of which is binding but some pointers would be appreciated. (pm if needs be?).

I have been a company director with another family member for several years. For many years the company made very little in terms of revenue/profit. We both had some fairly extreme personal circumstances in 2006 and 2007 and ended up not paying attention to our accounts, paying tax, vat etc and taking out whatever we earned without putting money aside for tax. We really have screwed up. However, in 2006 and 2007 we both earned much more through the company and the revenue went up.

Our only creditor is the Revenue and we owe a substantial amount - we've both tried to raise the money personally but have been rejected by our mortgage companies/banks. We made an offer to the Revenue to repay a small amount each month but they have rejected it and told us to liquidate. The company has next to no assets - a couple of computers and that's it.

Not having any experience of this, we don't even know where to start to be honest and are scared witless (and can't believe we got into this position). We both have a limited income over the next six months (and are obviously anxioius about the current economic climate).

So, my questions are:
a) how do we find a liquidator?
b) what can we expect to have happen?
c) what is the likelihood of being prosecuted for negligent trading?
d) in addition to finding a liquidator do we need to find a) a new accountant or b) a solicitor. How do we go about finding these people?
e) In terms of the amount we owe: are they likely to seek the full amount in repayment and is it known that they'll accept a monthly payment over a period of time - say five or ten years? Or could they put a lean on our homes?
f) Presumably this is going to affect our credit rating? If so for how long? Would it mean our current bank/mortgage lender will call in their loan or would they let it continue? Same with credit cards? (ie I would expect we wouldn't be able to get any new credit but any existing debt be called in).
g) We're not going to be company directors any more :-) However, in terms of finding permanent employment, would this have to be disclosed? How would we handle it (I appreciate that this may not be the right forum for that question).
h) in terms of liquidation costs what's a reasonable amount if we appoint a liquidator - will there be court costs, any other costs- how much are we going to need to liquidate the company?

Thanks in advance anyone - pointers on how to get the right advice would be very much appreciated.

I can't really advise you OP, but it is isn't as bad as it looks. Firstly, go see your accountant. He will likely tell you that liquidation only really happens if there are assets to liquidate. In your case, that doesn't seem to be an option, so there will be no liquidation.

I wouldn't worry for the moment about trading recklessly. Every venture carries risk, once you have limited liability, you have protection, insofar as you cannot be chased for your own assets to pay Revenue.

See your accountant and relax, loads of people start up and fail, I did, and most people who have found success have also failed, more than once!

I got a decision once from Revenue that cost me 12,000 Euro. I appealed their decision to the Appeals Commissioners and got the whole lot back! They are not infallible, you can appeal any decision they make. In my case, I was dealing with what looked like an alcoholic tax inspector who was just being a c*nt. I took him down to China town and won my appeals case and I represented myself, so don't be afraid to stand up to them and fight your corner if you have to!

Trump

It is lesson for everyone not to ignore the taxman or revenue at any stage.

Regarding your very serious situation I would contact your accountant for advice straight away.

Your accountant may also help you negotiate a way out of the mess you find yourself in.

information

Darragh29 wrote: »

I wouldn't worry for the moment about trading recklessly. Every venture carries risk, once you have limited liability, you have protection, insofar as you cannot be chased for your own assets to pay Revenue.

Trading recklessly is one of the way in which you can loose your limited liability.

Darragh29

information wrote: »

Trading recklessly is one of the way in which you can loose your limited liability.

Yes but most companies don't fail for this reason, particularly in the current climate. You are well entitled to try and fail, there is nothing reckless about this, starting up a successful business is extremely difficult... The most important when dealing with Revenue is to stand your ground, don't let them rattle you...

Our man in Havana

It would be up to the Director of Cooperate enforcement to determine if you traded recklessly. The chances of them prosecuting you are very small indeed.

StickyMcGinty

Bond-007 wrote: »

It would be up to the Director of Cooperate enforcement to determine if you traded recklessly. The chances of them prosecuting you are very small indeed.

small chance of prosecution, yes. But they can stop you becoming a Director for 7 years, and since this is a public register it may effect some of your future projects

information

Trading recklessly is usually taking order from customers getting stock from suppliers when you know you won't be able to fulfill the order pay for the stock.

This guy just took the money straight out of the company, no paye/prsi, vat etc. This is more a case of stealing rather than reckless trading. There is no way the revenue will let you away with this.

Again this has nothing to do with trying to make a go of it and failing, its simple theft.

CompanyDirector

Thanks everyone.

We have appointed a liquidator - we spoke with two we found on the internet and went with the one who we felt most comfortable with - have no idea whether he is good/right in the advice he's given. Notice is to go in paper this week of the creditors meeting.

We do have mitigating circumstances, we're not sure how much difference they will make to the outcome/ruling, it will take three to six months apparently for this to be all done.

I was really hoping in my original post to get some recommendations in terms of how to find a good liquidator/solicitor/accountant (we think we have been badly advised by our current accountant) - how and ever we have started the ball rolling now so we shall have to wait and see what comes out of it.

Information - I'm not sure from your post whether you're making this point based on opinion or experience? I'd appreciate you clarifying,

Thanks again.

Darragh29

CompanyDirector wrote: »

Thanks everyone.

We have appointed a liquidator - we spoke with two we found on the internet and went with the one who we felt most comfortable with - have no idea whether he is good/right in the advice he's given. Notice is to go in paper this week of the creditors meeting.

We do have mitigating circumstances, we're not sure how much difference they will make to the outcome/ruling, it will take three to six months apparently for this to be all done.

I was really hoping in my original post to get some recommendations in terms of how to find a good liquidator/solicitor/accountant (we think we have been badly advised by our current accountant) - how and ever we have started the ball rolling now so we shall have to wait and see what comes out of it.

Information - I'm not sure from your post whether you're making this point based on opinion or experience? I'd appreciate you clarifying,

Thanks again.

I'm a bit confused OP. Do you have company assets that can be liquidated??? A liquidator is going to be looking for 20-30K in fee's as a minimum or so I've heard.

Revenue are secured creditors. What this means is that when you put a list of your creditors down on paper, they will be at the very top of this list. They will get their slice of what is available first before anyone else. You'll be lucky if there is anything left for anyone else, as they will just pick a number out of the sky. Then there may be other creditors and if you have money left after Revenue to pay them off, you have to worry about your liquidator and his fee.

I just want to make the point that you'd need a lot in assets to meet this bill. If I was in your position, I'd just be sure you've looked at all the options before going down this road. If you could get Revenue off your back and get your other creditors happy, you don't have to "wind up" or liquidate the company. You could just do a return once a year, get your accountant to just meet the statutory requirements, which I think is to file a balance sheet and a B1 form. You can do a voluntary liquidation down the road if you wanted and you don't need a liquidator to do this.

information

Darragh29 wrote: »

I'm a bit confused OP. Do you have company assets that can be liquidated??? A liquidator is going to be looking for 20-30K in fee's as a minimum or so I've heard.

I would say the revenue want these guys out of business, to stop them from doing the same again and punish them.

OP
Clarifying what exactly ?

Darragh29

information wrote: »

I would say the revenue want these guys out of business, to stop them from doing the same again and punish them.

OP
Clarifying what exactly ?

If they wanted that, the only way they can achieve this is to get a conviction against the directors and have them restricted as directors. Revenue just want their money and in a certain way make the OP tax compliant (this will involve a stab in the dark guess at his original tax liability, interest on that liability and a fine to discourage him and everyone else, from not being tax compliant).

It's not open to Revenue to deal with people in the way that you have suggested. ANY tax decision can be appealed to The Appeal Commissioner.

It can be intimidating dealing with Revenue, espcially if the inspector is a gimp. I had the mother of all c*nts once from Revenue who taxed me 12,000 Euro when I had no liability whatsoever. I wrote back and said I had no liability and sent back the finance act and highlighted the section of it that dealt with my situation, which said I had no liability.

He wouldn't back down and wrote back to me telling me to pay up or I risked the county sheriff coming to my premises to seize goods to the value of 12!

I went on the web and found the website for the Appeal Commissioners, filled out the form and got my case listed for hearing. THIS DIDN'T COST ME A PENNY! My case came up about 8-9 months later, I represented myself and had my appeal upheld, and got a cheque for 12K plus interest from the same c*nt who threatened to send in the sheriff if I didn't bend over for him!

http://www.appealcommissioners.ie/index.htm

My best advice to the OP is first of all, get a figure in writing for the liability that you have to Revenue. Then appeal it and get your liability down to as low as you can possibly get it. If this is the only liability you have, then things really might not be as bad as they appear.

I know people here always say get professional advice but before I went to the Appeal Commissioner, I had four solicitors, two barristers, a HR Dept, one accountant and two tax inspectors telling me I had it wrong and was wasting my time, but I proved them all wrong in the end.

These people are 10% professional and 90% salespeople in my opinion, so don't underestimate your ability to resolve this to your satisfaction without paying through the crack for it.

information

Darragh29 wrote: »

If they wanted that, the only way they can achieve this is to get a conviction against the directors and have them restricted as directors.

Revenue just want their money and in a certain way make the OP tax compliant (this will involve a stab in the dark guess at his original tax liability, interest on that liability and a fine to discourage him and everyone else, from not being tax compliant).

OP
"We made an offer to the Revenue to repay a small amount each month but they have rejected it and told us to liquidate. The company has next to no assets - a couple of computers and that's it."

The revenue are going to get nothing by liquidating the business, as stated by the OP. They refused a payment plan, so they don't seem concerned about getting their money in the short terms.

Long term they will find a way to go after the directors personally, this may involve getting them via the ODCE first.

My opinion is that the revenue think these guys are cowboys and want them to stop operating the business, as they feel it will lead to more messing, getting them to liquidate is a way of achieving this.

Darragh29

information wrote: »

OP
"We made an offer to the Revenue to repay a small amount each month but they have rejected it and told us to liquidate. The company has next to no assets - a couple of computers and that's it."

The revenue are going to get nothing by liquidating the business, as stated by the OP. They refused a payment plan, so they don't seem concerned about getting their money in the short terms.

Long term they will find a way to go after the directors personally, this may involve getting them via the ODCE first.

My opinion is that the revenue think these guys are cowboys and want them to stop operating the business, as they feel it will lead to more messing, getting them to liquidate is a way of achieving this.

Your in luck OP, someone has already done the homework for you!!!

http://www.liquidation.ie/

People who work in Revenue are the most removed from reality you will ever meet. Don't be afraid to standup to them!

CompanyDirector

Hi,

Information - have to say - this has happened through a genuine mistake - neither of us ever anticipated a liability the size it has turned out. We had made some payments in line with the previous profits but had not put enough aside for recent profits. We have owned up to the liability to the revenue and made our very best offer in terms of repayment over time, which they have rejected. We were late completing our accounts due to the mitigating circumstances I mentioned before and that's how this situation has arisen. I was looking for clarification from you in terms of your previous post saying we had been stealing - technically perhaps it is, however, I would have thought for it to be stealing it would have to be a conscious decision and secondly that we wouldn't be prepared to repay what we owe. I guess however you're entitled to your opinion. In terms of being cowboys - yes we have cocked up here bigtime however our only liability is to the revenue, we do intend to repay what we owe as best we can, however we can't pay it all now (which is what they want). In retrospect the advice from our accountant wasn't just poor, it was non-existent - I guess you can come down hard on us for being under-informed and under-prepared?

We have started liquidation proceedings and we know that they may come after us for reckless trading in some way once they are done. We don't know what the outcome of that may be - the only assets either of us have is the equity in our homes, which potentially could cover the liability, if we were able to sell, but that's unlikely in the current economic climate..

Darragh, thanks for your help. I originally posted because we had spoken with several 'professionals' and got conflicting advice so I was hoping to get a 'real world' view on here from people who had some kind of experience over this. The liquidators fee by the way is 12K - but we may well rack up another chunk if we have to involve solicitors, etc.

So, we will most likely be barred from being directors for up to five years and most likely unable to get credit. This presents a problem if we have to sell our homes to clear debt - we will be unable to buy again for a period of time - how long I don't know.


Anyway,

legalnet

Hi

I was the MD of an SME and with the turn of the economy my business unfortunately went under, when it came to arranging a liquidation I hadn’t a clue what to do, so my accountant recommend a firm, but the cost was way too expensive they quoted me around 15,000, which was something I wasn’t willing to fork out. I then found this crowd <snip> and to be fair they were great. It was a really hard time for me and they handled everything and it cost a little over 2k

Hope this helps

Heisenberg.

This post has been deleted.

legalnet

Unfortunately I don’t work at all now!

mcaul

Just noticed this was a old thread

Heisenberg.

This post has been deleted.