Company Disolved

jezzer · 20-07-2016 1:51pm #1

Folks can anyone tell me why someone would dissolve a company even though they are still trading, or how could they still operate even though their company has been dissolved last year?

Just a guy who owns a shop and runs it day to day is looking for supplies from us but I see that his company was dissolved last year, any help appreciated.

KBurke85 · 20-07-2016 1:53pm

The Company may have been struck off automatically by the CRO for failure to file up to date accounts, or perhaps the individual has dissolved the business and is now operating as a Sole Trader.

Lockedout2 · 20-07-2016 1:54pm

Failure to file annual returns!

jezzer · 20-07-2016 2:52pm

Lockedout2 wrote: »

Failure to file annual returns!

why would they fail to file annual returns? and as he has still been operating the shop how can he do this if the company has been dissolved?

Lockedout2 · 20-07-2016 2:59pm

jezzer wrote: »

why would they fail to file annual returns? and as he has still been operating the shop how can he do this if the company has been dissolved?

Because it costs money to get your accounts done!

The bank should have frozen the company bank account, as the previous poster has pointed out perhaps he operating a sole trader bank account.

blue4ever · 20-07-2016 7:13pm

Don't worry about it! Cash on Delivery or nothing - that's the only way to deal with it if you want the business

mrawkward · 20-07-2016 7:34pm

Has he applied for credit in the name of the disolved entity?

pedroeibar1 · 20-07-2016 11:04pm

Who is your customer? It’s a fairly basic bit of business knowledge to know with whom you are dealing. Who are you supplying, i.e. what name/entity are you invoicing? If you do not know the answers to those basic questions you are on the path to real trouble.
There is absolutely nothing wrong with many dissolved companies, they have just fulfilled their purpose and have ceased to exist. The business you are looking at might be one of those, and the activity might have been taken over by one of the shareholders who now is trading in his own name or in the name of a different Limited entity.

jezzer · 21-07-2016 8:33am

he never stopped trading so i am just wondering why his company dissolved...

pedroeibar1 · 21-07-2016 12:19pm

The ‘guy’ and the 'company' are two different entities. Who are you supplying? Business is not about dropping off a delivery and thinking "Shur it'll be grand!"

dbran · 21-07-2016 12:42pm

If he is still trading while the company has been dissolved then he has unlimited liabilities for all of the debts of the company from the point after the company was dissolved.

dbran

pedroeibar1 · 21-07-2016 1:21pm

dbran wrote: »

If he is still trading while the company has been dissolved then he has unlimited liabilities for all of the debts of the company from the point after the company was dissolved.

dbran

Not quite. If THE COMPANY is trading after it has been dissolved its directors have unlimited liability; they might have dissolved the company and HE carried on the business as a sole trader or transferred the business activity to another limited entity. That is why Awkward and I tried to ascertain the legal status of the customer (still unknown, a dozen posts later).

jezzer · 21-07-2016 2:48pm

pedroeibar1 wrote: »

Not quite. If THE COMPANY is trading after it has been dissolved its directors have unlimited liability; they might have dissolved the company and HE carried on the business as a sole trader or transferred the business activity to another limited entity. That is why Awkward and I tried to ascertain the legal status of the customer (still unknown, a dozen posts later).

legal status? all i know is he dissolved the company but never closed the doors

mrawkward · 21-07-2016 3:08pm

jezzer wrote: »

legal status? all i know is he dissolved the company but never closed the doors

You should have all the required information as to who you are dealing with on your account opening/credit application form. If you do not use these, ask him!!

Stephenc66 · 21-07-2016 3:57pm

OP This is a link to the different reasons a company can be dissolved.

https://www.cro.ie/termination-restoration/company

As a lot of posters say it is most often an involuntary strike off for failure to make annual returns

If it is involuntary and the warning letters from the CRO have gone to a registered address that is not being checked, to an accountant that has failed to act or the guy has just chosen to ignore the letters he may not even know that the business is struck off and continues to trade

On the other hand for his own reasons he has decided to voluntarily strike the business of and has done so correctly. He then starts trading as a sole trader or forms another company to carry on the business.

In either event the doors stay open, even if they shouldn’t in the case of a dissolved company stay trading. And if it is voluntary just like a pub or a shop that has gone through many owners but the name doesn’t change and it doors stay open.

From your point of view are you being asked to invoice the dissolved company, the guy himself or someone else?

jezzer · 21-07-2016 4:34pm

Stephenc66 wrote: »

OP This is a link to the different reasons a company can be dissolved.

https://www.cro.ie/termination-restoration/company

As a lot of posters say it is most often an involuntary strike off for failure to make annual returns

If it is involuntary and the warning letters from the CRO have gone to a registered address that is not being checked, to an accountant that has failed to act or the guy has just chosen to ignore the letters he may not even know that the business is struck off and continues to trade

On the other hand for his own reasons he has decided to voluntarily strike the business of and has done so correctly. He then starts trading as a sole trader or forms another company to carry on the business.

In either event the doors stay open, even if they shouldn’t in the case of a dissolved company stay trading. And if it is voluntary just like a pub or a shop that has gone through many owners but the name doesn’t change and it doors stay open.

From your point of view are you being asked to invoice the dissolved company, the guy himself or someone else?

the guy himself and when we looked into it i see he dissolved the company last year

DubTony · 21-07-2016 5:28pm

jezzer wrote: »

the guy himself and when we looked into it i see he dissolved the company last year

Then you've nothing to be concerned about re the company being dissolved. You're not dealing with the old company. Set the terms with the guy and get on with it.

pedroeibar1 · 21-07-2016 5:51pm

jezzer wrote: »

the guy himself and when we looked into it i see he dissolved the company last year

Finally. He’s a sole trader. So, from a credit risk perspective, what is he personally good for financially? What are his assets? Where are they? If the value you supply is big or has the potential to become so, I would also ascertain why the company was struck off. He might have walked from it, let it be struck off and stuffed the creditors; he might have given personal guarantees and banks might come chasing him; apart from financial risk, you should also look at ‘moral hazard’.

jezzer · 22-07-2016 10:30am

pedroeibar1 wrote: »

Finally. He’s a sole trader. So, from a credit risk perspective, what is he personally good for financially? What are his assets? Where are they? If the value you supply is big or has the potential to become so, I would also ascertain why the company was struck off. He might have walked from it, let it be struck off and stuffed the creditors; he might have given personal guarantees and banks might come chasing him; apart from financial risk, you should also look at ‘moral hazard’.

yes so this is my concern, is it a possibility that he closed the company, didnt pay his creditors and carried on running the shop as a sole trader?

Stephenc66 · 22-07-2016 11:03am

pedroeibar1 wrote: »

Finally. He’s a sole trader. So, from a credit risk perspective, what is he personally good for financially? What are his assets? Where are they? If the value you supply is big or has the potential to become so, I would also ascertain why the company was struck off. He might have walked from it, let it be struck off and stuffed the creditors; he might have given personal guarantees and banks might come chasing him; apart from financial risk, you should also look at ‘moral hazard’.

jezzer wrote: »

yes so this is my concern, is it a possibility that he closed the company, didnt pay his creditors and carried on running the shop as a sole trader?

There is every possibility but as Pedro points out you won't know until you do more digging.

Go back to the CRO website have a look at the company fillings to try to see why the company was dissolved.

Look for some trading references from him and follow up by calling the referees

Not knowing the type of shop or the goods involved could he source his stock elsewhere if had stiffed creditors previously?

jezzer · 22-07-2016 1:23pm

Stephenc66 wrote: »

There is every possibility but as Pedro points out you won't know until you do more digging.

Go back to the CRO website have a look at the company fillings to try to see why the company was dissolved.

Look for some trading references from him and follow up by calling the referees

Not knowing the type of shop or the goods involved could he source his stock elsewhere if had stiffed creditors previously?

no he would be very dependent on certain brands

DubTony · 22-07-2016 6:11pm

This isn't that unusual. Lots of people wrap up their companies and go as sole traders or start a new company. My old man did it twice in 20 years. Both times he paid of all the creditors, dissolved the company and carried on initially as a sole trader and then registered another company. The first time he did it, he even paid off Revenue (he was smarter the 2nd time

).

There are loads of reasons it's done. Directors / shareholders fall out. Divorce. Tax problems. Compliance costs. etc.

OP, If you really want to know, ask him. Or find some of his other suppliers and ask them. I wouldn't sweat it at all.

jezzer · 25-07-2016 8:46am

DubTony wrote: »

This isn't that unusual. Lots of people wrap up their companies and go as sole traders or start a new company. My old man did it twice in 20 years. Both times he paid of all the creditors, dissolved the company and carried on initially as a sole trader and then registered another company. The first time he did it, he even paid off Revenue (he was smarter the 2nd time ).

There are loads of reasons it's done. Directors / shareholders fall out. Divorce. Tax problems. Compliance costs. etc.

OP, If you really want to know, ask him. Or find some of his other suppliers and ask them. I wouldn't sweat it at all.

Do you mind me asking why your old man did it? tax reasons?

DubTony · 26-07-2016 12:29pm

I wasn't aware he'd done it the first time so I've no info on that, and the second one was a business partnership that had gone sour. He told me that the tax write off was a side effect of having a good accountant.

Clarification:

The second time he did it, he commented that he'd "avoided the taxes this time" which brought up the fact that he'd done it before, but not why.

Company Disolved

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