Ceased Trading

jamesy08

Hi all,i had a small ltd company for a few years,ceased trading in dec 09,my brother in law was a guarantor for any loans to the company,no personal loans taken out for me,i was running the whole show,he had his own wages,and he is still employed,ive shut down in the meantime,my accountant has all the books in order,revenus was notified of all the systems ceasing to trade,now,the company owed the bank €20k,another company €6k,and thats it,am i still liabible to the bank,cause my brother in law was guarantor,or since the company is gone,and he is no longer a director,and i might have work overseas,where do i stand
thanks jamesy

Red Sheds

I presume the loan was taken out by the company, therefore the company is still liable to the bank for the outstanding debt. In the first instance the bank will try and recover the funds from the company. As far as I am aware the Guarantor is just that, it Guarantees the debt in event of default by the debtor, i.e. the company. Also if the company defaults, and you are a director, you could be held personably liable in certain circumstances under company law as well as perhaps having your credit rating affected. Also I dont think your brother in law will be too happy to be left saddled with a 20k debt. To sum it up, your company still has to pay the money back

Hope this helps

jamesy08

Thanks for the reply,but ive been hearing of companies who just shut their doors,and owe hundreds of thousands,at least i set up a sole trader and am doing my best to make repayments,and people keep saying to me,you really dont have to pay anyone,as you have ceased trading,i dont really understand

MidlandsM

but you said you had a small ltd company - and now you say you were a sole trader?
The bank debt does have to be repaid.
As your bro - in - law went Guarantor, the bank will recover from him (if they have to)

If you really don't understand the whole ceased trading scenario, ASK YOUR ACCOUNTANT, not a forum on the internet. If they can't give you a clear understanding, then you should'nt be using them.

TheCostumeShop.ie: Ronan

If your brother in law is a guarantor and assuming you are not a guarantor; the company has closed down and there was no remaining value / cash in the business is not longer liable (hence limited liability). Your brother in law on the other hand is personally liable for the full amount and would have to declare bankrupcy to avoid paying it, assuming he has no assets other than his family home. If he does they will go after these for repayment, harsh but thats what he agreed to by going guarantor.

jamesy08

Thanks for the replies,yes i had a small ltd company,but ceased trading dec09,ive now started again,trading under my own name,no guarantors this time,im now trading as a sole trader,and im trying bit by bit to pay back the bank etc,as youve rightly said,the bank Must be paid no matter what
thanks again
jamesy

TheCostumeShop.ie: Ronan

Fair play James for getting back on your feet, really routing for you.

One quick point on company law here, if the bank find you've closed down the ltd company and then continued trading in the same sector as a sole trader, this makes you personally liable for the debt. This is to stop scamers closing down companies to avoid debt and not stopping trading.


Best thing to do is meet the bank and tell them whats going on, open a dialogue and have a realistic payback plan. Let your Brother in Law know too that your doing everything you can to honour the debt.

jamesy08

yes,i contacted the bank in jan this year,and explained what i was trying to do,yes my brother in law knows that im trying to pay back the bank,isnt it beter for me to keep trying and keep things paid,what would the bank have done if i had gone on the dole?and paid them back €30 a week

TheCostumeShop.ie: Ronan

Definitely better, your certainly doing everything right. Its not easy working hard and not getting to see the rewards.

If you walked away from the debt though the banks would have sold off your brothers assets if he had any or taken any cash savings he had.

91011

jamesy08 wrote: »

Thanks for the reply,but ive been hearing of companies who just shut their doors,and owe hundreds of thousands,at least i set up a sole trader and am doing my best to make repayments,and people keep saying to me,you really dont have to pay anyone,as you have ceased trading,i dont really understand

As your ltd company has ceased trading, then it obviously has no fund to pay unsecured creditors. The creditors can if they wish place the company into liquidation but this is unlikely as they would have to pay the liquidator.

The bank however simply requests full payment and if that can't be met will look at various options.

1. They may give a settlement figure less than the amount owed (up to 30% discount from experience of friends) if that amount can be paid immediately.

2. Probably the most popular solution, is you agree a payment schedule with them to clear the loan over 5 years.

3. They call in guarantor and get payment schedule from guarantor.

4. Last resort, they will take legal action to recover all sums, charges & interest. - this is rare if you keep in constant contact with them.

knighted_1

Registered User



Hi all,ive had a small company for the last few years,and now want to sell it,how do i go about this,is there a website where i can put a listing
thanks jamesy

jamesy08 wrote: »

Hi all,i had a small ltd company for a few years,ceased trading in dec 09,my brother in law was a guarantor for any loans to the company,no personal loans taken out for me,i was running the whole show,he had his own wages,and he is still employed,ive shut down in the meantime,my accountant has all the books in order,revenus was notified of all the systems ceasing to trade,now,the company owed the bank €20k,another company €6k,and thats it,am i still liabible to the bank,cause my brother in law was guarantor,or since the company is gone,and he is no longer a director,and i might have work overseas,where do i stand
thanks jamesy

last week you posted looking for info on how to sell your company -how can you sell it if you ceased trading in dec 09 ? is the company still alive or just dormant ?

jamesy08

Hi Knighted,sorry about the confusion,i was just trying to find a way out of the situation,im in at the moment,im operating at the moment as a sole trader,but i would have sold all the equipment,15yrs experience,etc,etc,if i could get out fast,and go and try something else,at the moment,im working 7days for the last few months,just to make payments,and even at that i cant keep up,

AndyJB

jamesy08 wrote: »

Hi Knighted,sorry about the confusion,i was just trying to find a way out of the situation,im in at the moment,im operating at the moment as a sole trader,but i would have sold all the equipment,15yrs experience,etc,etc,if i could get out fast,and go and try something else,at the moment,im working 7days for the last few months,just to make payments,and even at that i cant keep up,

Hi,
Sorry to read about your predicament. The positive is you're still trading?
No matter what you try you'll have similar issues, cash with standing.

Here's a few questions for you.....

1) How much money are you owed? How much can you collect? Are they business customers or home owners?
2) Are you up to date with VAT etc?
3) As you're still trading is there any hope of you merging with anyone else in your field?
4) Can you cut any further costs from the business? Get rid of that extra mobile phone or unused fax machine! Off load surplus stock at cost!
5) Have you spoken to your banks about the situation? They might be open to doing a deal on term length or amount!
6) I presume you bought a van/car with the cash. Can you offload it and get a smaller older one? Put whatever surplus you have at loan.

Best of luck.

jamesy08

Im not owed anything from any companies,i owe 1 company about 5k,and im paying €100 every week or so,
yes im up to date with vat
well not merging with anyone at the moment,but ive taken a chance and moved my equipment into a large store,and i can put my products on display,reasonable rent,no lease,month by month,and good footfall
yes ive spoken to the banks,my original bank,and have since switched,and am now trying to get an overdraft with these,to help the cashflow
the van i have is being paid by the month,1 1/2 payments left

jamesy08

one year and a half left sorry

AndyJB

jamesy08 wrote: »

Im not owed anything from any companies,i owe 1 company about 5k,and im paying €100 every week or so,
yes im up to date with vat
well not merging with anyone at the moment,but ive taken a chance and moved my equipment into a large store,and i can put my products on display,reasonable rent,no lease,month by month,and good footfall
yes ive spoken to the banks,my original bank,and have since switched,and am now trying to get an overdraft with these,to help the cashflow
the van i have is being paid by the month,1 1/2 payments left

Hi,
Can you offload van and get an older model? Look at carzone.ie. Is it on a lease? What would it cost to break?

Is there any scope for any possible merger with anyone?

Overdrafts are a very very expensive way to finance a business long term, could you get a loan top up?

Are you making any sales at the moment? You didn't mention the sector you're in? What are the products? Have you looked at web sales?

Not knowing your sector / business my initial gut reaction would be for you to keep trading your way out of the position. If you shut down as a sole trader the banks will come after you and your brother-in-law for their pound of flesh. Both your credit ratings will then be in the toilet.

How have you been getting the word out about your business/service?

If not done already, put a list of your outgoings together e.g. loans, rent, rates, diesel, VAT, your own rent/mortgage etc etc. Then list out your current and any pending sales.

On what basis are you registered for VAT? Cash receipts or invoice basis?

Have a look at http://www.revenue.ie/en/tax/vat/charging/index.html#_Cash_Basis2

Best of look.