Closing Ltd company - paying suppliers?

struggling89

Firstly, apologies for AE, I am a long term member but I tend to be more hugs and such on DT and I really want to keep this separate.

I am sole company director for a limited company, and have been for approx 6 years. I rely on suppliers to send items directly to end users.

Over the last 6+ months, these suppliers and their couriers have been increasingly less reliable. I have been having to send complimentary items to pacify and continue building relationships.

I have now lost all but one major and 2 minor customers. I am loathe to spend time and money seeking new ones due to the lack of reliability from my suppliers. I use 4, 2 main ones which have just been disastrous for this year really.

There is only one other supplier that could act, but as small fry, I cannot get the prices I would need to be competitive.

So to my point - can I close the business (it has brought me to tears more times in this 3 months than I would care to admit) and take the money owed from customers without paying my suppliers? I don't really want to discuss the morality of it, I know, but I need to know the ramifications legally really.

An idea of figures - I am owed just over £7K, and owe out just under £6K. Yes, things have got that bad this year.

TIA

SeduLOUs

struggling89 wrote: »

So to my point - can I close the business (it has brought me to tears more times in this 3 months than I would care to admit) and take the money owed from customers without paying my suppliers? I don't really want to discuss the morality of it, I know, but I need to know the ramifications legally really.

No, unfortunately. If only it were that simple!

https://www.gov.uk/closing-a-limited-company

struggling89

SeduLOUs wrote: »

No, unfortunately. If only it were that simple!

*deleted link as new user so not allowed to quote*

Thank you for that link

And if I just didn't pay? I thought the limited bit meant that I as an individual would not be responsible for the debts?

YEOVILGOM

Sorry - cannot ignore the morality of this even if you can.

But - sadly it is the easiest thing in the world. Collect payments and then tell creditors you have no cash, are ceasing trading and invite them to wind up company. Very unlikely any of them will as too costly. Give it a few months and then apply to strike off the company

PS Good luck with sleeping

SeduLOUs

struggling89 wrote: »

Thank you for that link

And if I just didn't pay? I thought the limited bit meant that I as an individual would not be responsible for the debts?

From what you've said, I gather that the company has the money/assets to pay in the company, so they have to be paid.

But to answer your question, unfortunately that isn't so simple either. If you deliberately spent the money to avoid paying the suppliers, knowing that the company would be wound up, then this is 'wrongful trading' and a court can make you personally liable for the company's debt.

http://www.icaew.com/en/archive/library/subject-gateways/law/insolvency/legal-alert/when-directors-can-be-personally-liable-on-company-insolvency

struggling89

YEOVILGOM wrote: »

Sorry - cannot ignore the morality of this even if you can.

But - sadly it is the easiest thing in the world. Collect payments and then tell creditors you have no cash, are ceasing trading and invite them to wind up company. Very unlikely any of them will as too costly. Give it a few months and then apply to strike off the company

PS Good luck with sleeping

Loving a bit of judgment on MSE. Always rely on that. As expected.

Had my suppliers done as they were contracted to do, this situation would not have arisen.

Would the winding up process not reveal the cash in the account though? Or the removal of it?

struggling89

SeduLOUs wrote: »

From what you've said, I gather that the company has the money/assets to pay in the company, so they have to be paid.

But to answer your question, unfortunately that isn't so simple either. If you deliberately spent the money to avoid paying the suppliers, knowing that the company would be wound up, then this is 'wrongful trading' and a court can make you personally liable for the company's debt.

As I suspected, thank you though for answering in what is a minefield and very difficult time. Much appreciated.

SeduLOUs

struggling89 wrote: »

Loving a bit of judgment on MSE. Always rely on that. As expected.

Had my suppliers done as they were contracted to do, this situation would not have arisen.

Would the winding up process not reveal the cash in the account though? Or the removal of it?

I get what he is saying. Despite my answers, to be found to have been 'trading wrongly' one of your creditors would presumably need to take you to court, which many would not do for various reasons.

On that basis, it would be ethically wrong not to pay them and attempt to 'get away' with it. But you certainly wouldn't be the first.

I appreciate that you were messed around with suppliers, but realistically in your role as a Director, you probably should have addressed the problems or sourced new suppliers a long time ago. In my humble opinion, it wouldn't be 'fair' of you to say "well, my suppliers caused me to go out of business, so I'm going to do the same to my suppliers". But that's not my decision to make.

struggling89

SeduLOUs wrote: »

I appreciate that you were messed around with suppliers, but realistically in your role as a Director, you probably should have addressed the problems or sourced new suppliers a long time ago. In my humble opinion, it wouldn't be 'fair' of you to say "well, my suppliers caused me to go out of business, so I'm going to do the same to my suppliers". But that's not my decision to make.

I have tried. I really have, it's not for the lack of it. I have spent years building this, and now, because the suppliers are cutting back on staff and using cheaper courier deals, it's just not working.

As an example, just this morning one of the couriers told one of my customers to "f*** off" And this customer has now left me. It took 6 months to win that contract. And now gone.

Contrary to how I am coming across, I am not a bad person, just desperately gutted at how unfair it all is, that my business is disappearing, and so so so sad.

SeduLOUs

struggling89 wrote: »

I have tried. I really have, it's not for the lack of it. I have spent years building this, and now, because the suppliers are cutting back on staff and using cheaper courier deals, it's just not working.

As an example, just this morning one of the couriers told one of my customers to "f*** off" And this customer has now left me. It took 6 months to win that contract. And now gone.

Contrary to how I am coming across, I am not a bad person, just desperately gutted at how unfair it all is, that my business is disappearing, and so so so sad.

And I appreciate that we don't know the full story, which is why I choose not to judge.

From what you are saying, do you have any options to dispute the invoice on the basis that they didn't fulfil their terms of the contract? I've no idea what sort of contract you have with them, and I'm out of my area of knowledge and wandering aimlessly in opinion-land, but surely such a massive customer services blunder that has resulted in you losing a customer sounds like a fairly strong argument to refuse to pay for the 'services' they provided.

If you want to get out of paying them, try to get out by complaining to them appropriately and getting the invoices you owe credited.

If you just avoid paying and then do get taken to court and found to be in the wrong, it could end up costing you a lot more, and I suspect there would be other repercussions beyond your pocket of having a successful claim against you.

paddyrg

struggling89 wrote: »

Had my suppliers done as they were contracted to do, this situation would not have arisen.

If the suppliers are in beach of contract, why not pursue that separately? Are the contracts poorly written/ill defined so you can't use the courts, or do you believe your suppliers cannot make amends, etc? Sounds like that's the real problem.

You could just try hosing them, likely they might write off some bad debt, but be aware that being a director has responsibilities, and this could be enforced against you personally if they chose to. It could also count against you getting lines of credit in the future if your last company folded in debt to suppliers - I know I wouldn't want to supply you in this case.