Can an insolvent company be dormant?

J66998821

Looking for some advice please. We purchased some goods from a company (and never received them). The company has now ceased trading but is still active on companies house. 

We have gone through all the usual methods of requesting our money back with no success. 

We have now been informed that because the company can’t afford to pay anyone to liquidate the company that it’s going to stay dormant unless and creditors want to request liquidation. 

What happens if creditors don’t request the liquidation? Is it illegal for the company to remain dormant but insolvent? 

Trading standards have advised we can’t take the company to small claims court because they are no longer at their address (rented office) so we can’t prove any official letters/correspondence were delivered to the company asking for our money back.

Any advice please? 

CliveOfIndia

If you paid for the goods using a credit card, the simplest option is a S75 claim.

A Chargeback is another option (and also applies if you paid by debit card), but you may have less success if the company has ceased trading.

MattMattMattUK

J66998821 said:

Looking for some advice please. We purchased some goods from a company (and never received them). The company has now ceased trading but is still active on companies house. 

We have gone through all the usual methods of requesting our money back with no success. 

We have now been informed that because the company can’t afford to pay anyone to liquidate the company that it’s going to stay dormant unless and creditors want to request liquidation. 

What happens if creditors don’t request the liquidation? Is it illegal for the company to remain dormant but insolvent? 

Trading standards have advised we can’t take the company to small claims court because they are no longer at their address (rented office) so we can’t prove any official letters/correspondence were delivered to the company asking for our money back.

Any advice please? 

An dormant company should not have been trading, doing so is a breach of various legislation. If the directors took an order knowing the company was insolvent then that is wrongful trading as well. It is illegal for a company to remain dormant full stop, an insolvent company must be liquidated. A dormant company cannot become insolvent because it cannot trade, so any trading would have been illegal. 

Are you actually sure you dealt with the real Limited company, or just someone pretending to be them?

sheramber

MattMattMattUK said:

J66998821 said:

Looking for some advice please. We purchased some goods from a company (and never received them). The company has now ceased trading but is still active on companies house. 

We have gone through all the usual methods of requesting our money back with no success. 

We have now been informed that because the company can’t afford to pay anyone to liquidate the company that it’s going to stay dormant unless and creditors want to request liquidation. 

What happens if creditors don’t request the liquidation? Is it illegal for the company to remain dormant but insolvent? 

Trading standards have advised we can’t take the company to small claims court because they are no longer at their address (rented office) so we can’t prove any official letters/correspondence were delivered to the company asking for our money back.

Any advice please? 

An dormant company should not have been trading, doing so is a breach of various legislation. If the directors took an order knowing the company was insolvent then that is wrongful trading as well. It is illegal for a company to remain dormant full stop, an insolvent company must be liquidated. A dormant company cannot become insolvent because it cannot trade, so any trading would have been illegal. 

Are you actually sure you dealt with the real Limited company, or just someone pretending to be them?

Is that not what the OP said

We have now been informed that because the company can’t afford to pay anyone to liquidate the company that it’s going to stay dormant unless and creditors want to request liquidation. 

born_again

CliveOfIndia said:

If you paid for the goods using a credit card, the simplest option is a S75 claim.

A Chargeback is another option (and also applies if you paid by debit card), but you may have less success if the company has ceased trading.

Company not trading or insolvent makes no difference to a chargeback. Funds come from their merchant bank.

OP needs to confirm how they paid & a time line.

J66998821

Sadly paid by bank transfer as did many other customers.

conpany always dormant on companies house (over 2 years) but assume they must have notified the relevant people at some point because they’ve definitely been trading a fair amount 

yes it was definitely a legitimate company at one point 

CliveOfIndia

born_again said:

CliveOfIndia said:

If you paid for the goods using a credit card, the simplest option is a S75 claim.

A Chargeback is another option (and also applies if you paid by debit card), but you may have less success if the company has ceased trading.

Company not trading or insolvent makes no difference to a chargeback. Funds come from their merchant bank.

True.  Sorry, I should perhaps have been clearer.  If the company has no money, it's the company's bank themselves who will be footing the bill.  And since Chargeback is not a "legal" protection (unlike S75), there's no guarantee they'll agree to the chargeback.

Unfortunately it seems it's a moot point in this particular instance since I notice the OP has now confirmed they paid by bank transfer.

Hoenir

J66998821 said:

Looking for some advice please. We purchased some goods from a company (and never received them). The company has now ceased trading but is still active on companies house. 

The Company has to be closed down before it's struck off Companies House.  

Ectophile

Trading standards have advised we can’t take the company to small claims court because they are no longer at their address (rented office) so we can’t prove any official letters/correspondence were delivered to the company asking for our money back.

You only need to prove that you posted the notice to the company's registered address.  It's then up to the company's management to prove that they didn't receive it.  See section 7 of the Interpretations Act  https://www.legislation.gov.uk/ukpga/1978/30/section/7

You could quite easily win a judgement by default if they are stupid enough to give an address they are not at in their official records at company's house.  But that probably won't get you the money.

J66998821

Thanks everyone. 

I have looked into the option of requesting the company wind up but the legal fees for me as a creditor would be around £2900 

seems absolutely crazy?! 

Is the company allowed to just remain dormant and not liquidate or attempt to explain their insolvency? Thanks 

Phoenix72

There are 2 options for the company to self-liquidate. Both involve costs that the business may not have.

Other option is Compulsory Liquidation after action from creditors resulting in a court order - the creditor incurs costs so only worthwhile if there are assets an Insolvency Practitioner can turn into cash and distribute.

Hate to say it, but your money has gone.