Please Help. Do I liquidate my insolvent Company?

munsterfan1965

Hi There, I am new to this group and am looking for some hepful advice.
I am currently at my Wits end in my Company. If there’s anybody else who has being through this or can properly advise, I would really appreciate the help. I will try keep this as short as possible.
I own a Limited Company in Munster that’s being operating for 20 odd years. The downturn has taken a huge toll on business. We turned over Approx €2M at the height of the boom, now we are at approx €750K.
We are currently losing Approx €60K P.A. and have being doing so for the last 2 years. We have got various bank funding (commercial invoice discounting) Etc. These loans have really only shored up losses as I thought the business would have picked up before now (I know, head in the sand type thing)
We employ 8 people and need all of them to run the business (3 of them job share).
I have not taken a salary in 6 Months and have pumped Approx €60K of my own money in to help pay Company Debts.
The losses however are catching up on us and I’m finding it hard to keep creditors at bay on a day to day basis. My main Bank will not give us any overdraft and are bouncing any cheques that put us over our zero limit. The business may pick up this year, but I’m not sure if it’s “too little too late” and do we get further into debt with our Creditors/revenue in doing so.
We stupidly got involved in UK properties (too late) and now are stuck with 4 UK Apartments and a Holiday home in the Kerry region that are all in negative equity. Albeit, the UK properties are now covering the “interest only” mortgages because of current interest rates.
We owe the revenue Approx €20K and the Banks Approx €220K in loans and €500K in Mortgages. I have personally guaranteed Approx. €70K of a loan and €250K in Mortgages.
My questions are:
Should I put the Company into Voluntary liquidation? Can I do this if the business is insolvent?
What is the worth of the Guarantees, when I personally am as good as bankrupt if the business goes under?
Are there any further implications that I should know about?
I own two properties personally that I am struggling to cover the interest on, (there is little or no real equity here either). (Separate lenders from the business) I can deal with them personally for about a year before they may get nasty.
I would absolutely hate to do this to my staff as I have got very friendly with all of them, but I have completely got into a tunnel and cannot see any light at the end.
The usual other stuff, my car Etc is borrowed to the hilt and will be repo’d
I have no other significant assets really.
I am in my mid 40’s with no qualifications, so am guessing that I may be looking to get some money together to buy and run a Taxi. (A prospect I actually don’t mind if it takes the unbelievable stress away).
I am extremely worried about what to do. The usual not sleeping at night and now drinking probably a little more than I should be (not a worry yet).
Any suggestions would be extremely welcome?
I am at a point where I don’t care anymore about the Stigma that a business closure would bring to me from friends and neighbours.

TheCostumeShop.ie: Ronan

Hi munsterfan1965,

Really sorry to hear of your predicament. Unfortunately i don't think there's too much advice we can give that will be of much help. I'd suggest meeting with a reputable accountant as soon as possible and work out exactly where you are now financially. If the ship is sinking and has no potential to get back afloat, make the difficult decision quickly and close down sooner rather than later. I appreciate its hard to let staff go but the longer you keep them on the deeper you will be in the hole.

Is it possible there is value in the company in terms of systems and processes that you could sell to or merge with another firm, even if you take a loss leaving you might be better off sell the debt at a reduced rate (maybe they would keep on the staff too etc).

FusionNet

Hi There,

I think even if no one can give you ground breaking advice here I think what you did getting all that off your chest is a good start. From your figures given your making about an 8% loss per annum, which is possible revoverable depending on the line of work you do. The creditors and rev can be an issue as they can force wind up proceedings. You obviously have an accountant, but I would recommend seeing another one and a solicitor as there are many courses of action.

At least your not alone and are one of about 200 a month thats doing the same thing. Im sorry I cant give you much better advice as I think this is a really specialised area and obviously impacts on many lives so keep doing what your doing and be proactive. Contact your suppliers before they contact you and keep the chin up. we have all made mistakes in this boom, some will hurt more than others but dont give up the good fight. There are a lot of people in boards here going through that exact thing but for obvious reasons they might not be so upfront and honest as you.

All the best...

conolan

Is the business worth something to anyone? 750k revenue is not to be sniffed at. 20 years of customers not to be sniffed at either.
Remember you can close the doors and open again quite legally provided you don't take anything of value from the business (like stock, debtors, cash). Remember also if you put in your own cash to pay bills this should be considered as loans to be repaid to you.

Would help to know if you're in construction (ouch) or distribution, services (OK).

antoinolachtnai

Yes, with that much turnover, the company may be worth something to someone, maybe a supplier or a customer. It might be worth weathering through for another year if you think an upturn will really help. Does the company have any equity in its buildings, stock, etc?

My gut feeling from what I read is that you should try to find some way to keep that business open. But it will be really tough and you will have to find a way to cut the business back further. You need to talk to an insolvency practitioner. I have seen a few people go through this in the last while (and did it myself last time round) so PM me if I can be of any help.

Don't give up hope. There is always something. And you are not old. You will get up and do something else.

searay

Dear Munsterfan1965,

Sorry to hear of the challenges you're facing. You need to address your company situation first and then address your personal finances. There may be some hope to get value from your company given its still generating sales. If it doesn't have value you will need to liquidate it. You need to talk to an accountant experienced in corporate recovery to decide on the best option.

PM me if you want suggestions on accountants you can talk to.

munsterfan1965

Hi Guys, Thanks for your responses, I am putting the Company into liquidation on friday. Things with banks have taken the usual step for the worse. They have basically told me that they want to close our accounts because of bounced cheques/DD's/SO's. Not relishing this but knew this was coming down the line for a while. the business was a service/distribution business. Established over 25 years. Hate walking away from that turnover (Approx 750k) but the debts are too insurmountable to handle. If nothing else, it's somewhat of a relief. I honestly couldn't face work every Monday morning knowing that there was going to be 10 calls every day with people screaming form money. Our biggest Creditor (€100k) has Credit insurance on us, so I'm grateful that they will not be badly hurt. (Except for an increased premium next year).

TheCostumeShop.ie: Ronan

Glad to hear the hardest decisions are behind you. Head up, its not a reflection on you as a person (I say this cause i know someone who had problems separating his failed business with him as a person). Most of the very best entrepreneurs have had business fail before they made the big money. I hope you don't let you put it off business in the future.

antoinolachtnai

munsterfan1965 wrote: »

Hate walking away from that turnover (Approx 750k) but the debts are too insurmountable to handle.

What or who is going to service your customers after Friday? Is there any opportunity for you? I hope all goes well.

FusionNet

Hi Munster,

Well your not the first and you wont be the last... This last 2 years has killed small and huge companies. At least your protected to a point and I hope you can start something soon again. Keep the chin up and think positive. A business owner that has never failed can never really succeed, so think about the next venture and keep going...