P&A CASE STUDY:
Mr Smith is the director of a limited company whose principal activity is that of a car service centre business, providing basic motor servicing to the local community. Mr Smith and his wife are equal shareholders.
The premises are owned by a third party landlord and the company owns some diagnostic kits and hydraulic car ramps, all of which are stated in the most recent financial statements to have a net book value of less than £3,000.
The company has liabilities in respect of a bank overdraft, unpaid VAT for two quarters and trade creditors in excess of £20,000, one of which is threatening recovery action.
Mr Smith has no personal wealth and can’t afford to meet the usual costs of a formal liquidation.
Through our ‘report on cessation’ service, a member of our team would attend the business premises in order to obtain a list of all assets and liabilities. The business would cease trading and Poppleton & Appleby would prepare a report to provide both directors and creditors a comprehensive overview of the financial position of the company and options available. Within the report creditors would be notified that the director is unable to instigate formal insolvency proceedings.
The circulation of the report will be undertaken by Poppleton & Appleby.
Mr Smith can then begin to look to the future and creditors can make an informed decision as to whether they want to instigate insolvency proceedings themselves.