All insolvency practices will take you through the legal steps, but it is also important to consider the practical steps that you should take to achieve the best outcome, both for creditors and for you.

HM Revenue & Customs

You should firstly ensure that you have completed all outstanding returns for PAYE, Corporation Tax, VAT and any other industry specific taxes you are required to pay. This will act to limit the liabilities to HMRC by reducing any outstanding penalties and actual return amounts are usually lower than the assessments that will be raised by HM Revenue & Customs.

In particular bringing PAYE records up to date and arranging for P45 returns to be submitted will make claiming outstanding entitlements from the redundancy payments office due to you and your staff much more straightforward.

If you are receiving visits from HM Revenue & Customs enforcement officers, once you have engaged an insolvency practitioner and agreed a date for the winding up they will generally back down fairly quickly to allow the Company to be placed into Liquidation.

Bailiffs

If you have received notice from any court enforcement officers or high court enforcement officers, details of these should be passed to the Insolvency Practitioner as soon as possible. If notice is received there should be no delays in proceeding with your instruction as the insolvency practitioner cannot stop bailiffs until they are formally arranging the winding up of the company.

Books and Records

As a director you have a duty to preserve the company’s books and records. The insolvency practitioner will ask for these very early in the liquidation so it is important to ensure these are accessible. In particular you should ensure that information to support creditor balances is available to adjudicate their claims and information in relation to debtors is available to assist the insolvency practitioner with the collection of the debtor book.

It should be noted that if the records are deficient and this leads to losses to the Company such as significant debtors becoming noncollectable this is a matter which will have to be included in the conduct report to the Secretary of State and may expose you to disqualification.

You should also be ready to deliver up login details for online services, including but not limited to any cloud based accounting software, the HMRC pages for VAT, PAYE and CT, the Company website and any other selling sites used such as PayPal and E bay.

Company Bank Account

In relation to the Company bank account you should take steps to immediately cancel all direct debits and standing orders and we generally suggest reporting any credit and debit cards as lost or stolen so no payments are taken where mandates have been granted.

You should not make any payments from the company account, particularly to yourself or others you wish to pay off as you will become personally liable for these payments. If the account is overdrawn you should ensure no further receipts are paid into this account, particularly if it has been personally guaranteed as you will also be personally liable to compensate the estate for these payments.

The company account will likely be frozen once notice of the pending liquidation is published in the London Gazette so in short you should take every step to ensure that movement in the company account is limited short of receiving debtor payments where the account is already in credit.

Company Assets

At this time it is imperative that all actions are taken to preserve the assets of the Company. As a director you can take forward the assets of the company, however you will need to purchase them from the Liquidator. To enable this to happen and to also provide an accurate Statement of Affairs, for which you will need to sign a Statement of Truth, you will need to provide details of all assets of the company as well as a recent stock take. The insolvency practitioner will then obtain a professional valuation from RICS Chartered Surveyors who will carry this out either onsite or based on the lists provided depending on the nature of the assets.

If a list is requested it is important to ensure that all assets are included as if any are not declared they would not be included in the transfer which would mean:

  • The purchaser would not have legal ownership of the assets.
  • High Court Enforcement Officers would be able to uplift these assets.
  • If the Insolvency Practitioner becomes aware of these assets at a later date, they can arrange for these to be uplifted and also seek rental for the time they have been used.

The man in the pub may tell you that they can be bought for pennies in the pound however this is simply not true. All assets must be bought at market value or they will be uplifted and offered to third parties.

Retention of Title

If any creditors approach you advising they have retention of title and wish to collect their assets no action should be taken and you should refer them to the instructed insolvency practitioner to validate their claim. More information on Retention of Title can be found here.

Employees

It is important to ensure that once the decision has been made to liquidate the Company arrangements are made to properly deal with the redundancy or TUPE transfer of any employees.

Redundancy

Where there is not a new Company seeking to take over the contracts of employment it is important to ensure that proper arrangements are made to deal with the redundancy process. Where 20 or more members of staff are to be made redundant there is a legal requirement to notify the Redundancy Payments Office immediately.

Our insolvency team can then arrange to assist you in speaking to the staff in relation to their redundancy. It is important to ensure that if staff have any Company assets a list is provided to the insolvency practice and staff are asked to bring these items to the meeting, otherwise they are difficult to recover.

Many firms take staff through the redundancy process, however do not assist them with whats next. Our team can arrange for representatives from Jobcentre Plus and the careers service to attend the meeting to provide advice to staff on how they can move forward and their entitlements.

Staff will be able to formally make claims for their entitlements to the Redundancy Payments Office which will usually take 3 – 6 weeks to process once the Company is formally in liquidation. Directors are also fully entitled to claim, however the process is not quite as straightforward. More information on submitting these claims can be found here.

TUPE Transfer

If the assets of the business are sold prior to the Company being placed into Liquidation and staff continue to work after the date of the sale without interruption it is deemed that a transfer under TUPE has taken place. The effect of this is that staff contracts will continue under the same terms and entitlements under the new business and this is not reversible.

Further information as to when TUPE applies can be found here

Conclusion

All of this may seem a lot of work at an already very stressful time, however it will leave the company in a clear and transparent position before you instruct an insolvency practitioner, which in itself will mean the liquidation can be dealt with quicker, and more effectively. Ultimately, by getting the work done in preparation for liquidation, you are lessening the amount of contact you will need with a liquidator after it!