Estate includes an (insolvent) Ltd company - help?

Pinklepurr

I’m executor for a family member who has recently passed away.  The Estate includes an insolvent private Limited company.  My family member was the sole director and shareholder. No employees and no business assets other than a desk, chair & laptop. Last accounts posted on Companies House show business as having significant creditors.  I am unable to ascertain exact financial status as I have no access to any accounts, emails, bank statements or invoices. Nor do I know who his customers were and if they were owed money. However, for Probate I have to provide a valuation.

I don’t know where to turn?.  Does anyone have any experience of a similar situation and how did you overcome it?  I have spoken with two probate solicitors who haven’t been particularly helpful or reassuring. They require a valuation from his Accountant, which I cannot provide as they did not make up the last set of accounts and they had formally disengaged from providing services to him. I wondered if a copy of the company’s “Articles of Association” showing his shareholding of 100 shares (and therefore liability of £100) would suffice?  There must be some way around this, I’m sure I’m not alone in facing this problem.

I have also spoken with an insolvency practitioner about winding up the company but have been advised against getting involved in any way due to the potential transfer of liability. It has been suggested that it is best to leave well alone and allow Companies House to strike it off in due course.

The Estate itself isn’t insolvent, there is equity in a property, various shares and a small amount of savings, but I need Probate to sell the property. No inheritance tax will be due.

Help?

mebu60

Isn't it only be the shares that form part of his estate and they have no value if there's not going to be any dividend paid and the limited company will eventually be struck off? The estate is effectively the holder of some worthless shares. That would be my start point as executor. I would have no dealings with the limited company in any other regard. 

user1977

Assuming the deceased wasn't also a creditor of the company (in which case you'd want to work out what percentage of any assets they're entitled to?). Otherwise as above, the shares have no value.

The deceased wasn't a personal guarantor of any company debts?

mybestattempt

As @mebu60 says the just the shares are part of the estate and they have no value.

Also, take no action with the company and when it is stuck off the shares will cease to exist.

Marcon

user1977 said:

Assuming the deceased wasn't also a creditor of the company (in which case you'd want to work out what percentage of any assets they're entitled to?). Otherwise as above, the shares have no value.

The deceased wasn't a personal guarantor of any company debts?

That's certainly a question which needs to be asked, particularly in the light of OP's comment that the last accounts show the business had 'significant creditors' (presumably without assets which would cover these...?). If a limited company trades once insolvent (or while the directors should have known it was insolvent), the directors can become personally liable for any debts incurred from the point at which they knew or should have known that to be the case - in which case the debts could become a claim against the estate.

Pinklepurr

Marcon said:

user1977 said:

Assuming the deceased wasn't also a creditor of the company (in which case you'd want to work out what percentage of any assets they're entitled to?). Otherwise as above, the shares have no value.

The deceased wasn't a personal guarantor of any company debts?

That's certainly a question which needs to be asked, particularly in the light of OP's comment that the last accounts show the business had 'significant creditors' (presumably without assets which would cover these...?). If a limited company trades once insolvent (or while the directors should have known it was insolvent), the directors can become personally liable for any debts incurred from the point at which they knew or should have known that to be the case - in which case the debts could become a claim against the estate.

That’s a very interesting point, thank you.  How would I find out the answers to these points though? The latest accounts posted to Companies House show the total amount owed to creditors but not to whom it was owed.  As mentioned before I have no access to emails, accounts or invoices. 

Hoenir

What was the nature / trade of the business? 

Keep_pedalling

If you are not the sole beneficiary I would make sure I covered myself against the possibility that he has unknown creditors through posting a notice in the London Gazette.

Did he have an accountant?  

user1977

Pinklepurr said:

Marcon said:

user1977 said:

Assuming the deceased wasn't also a creditor of the company (in which case you'd want to work out what percentage of any assets they're entitled to?). Otherwise as above, the shares have no value.

The deceased wasn't a personal guarantor of any company debts?

That's certainly a question which needs to be asked, particularly in the light of OP's comment that the last accounts show the business had 'significant creditors' (presumably without assets which would cover these...?). If a limited company trades once insolvent (or while the directors should have known it was insolvent), the directors can become personally liable for any debts incurred from the point at which they knew or should have known that to be the case - in which case the debts could become a claim against the estate.

That’s a very interesting point, thank you.  How would I find out the answers to these points though? The latest accounts posted to Companies House show the total amount owed to creditors but not to whom it was owed.  As mentioned before I have no access to emails, accounts or invoices. 

So where is correspondence to the company currently going? 

TripleH

Check companies house to find address of the company's registered office (check it is the .gov.uk site)

The accounts may even state who the accountants are. You don't need to pay to view the accounts or other documentation (if you are asked to pay, you are on the wrong site).

I'd leave things as they are but do publish a notice in the London gazette (keeping a copy) to advise of the death and allow a reasonable time for parties to come forward before taking action.

Marcon

Pinklepurr said:

Marcon said:

user1977 said:

Assuming the deceased wasn't also a creditor of the company (in which case you'd want to work out what percentage of any assets they're entitled to?). Otherwise as above, the shares have no value.

The deceased wasn't a personal guarantor of any company debts?

That's certainly a question which needs to be asked, particularly in the light of OP's comment that the last accounts show the business had 'significant creditors' (presumably without assets which would cover these...?). If a limited company trades once insolvent (or while the directors should have known it was insolvent), the directors can become personally liable for any debts incurred from the point at which they knew or should have known that to be the case - in which case the debts could become a claim against the estate.

That’s a very interesting point, thank you.  How would I find out the answers to these points though? The latest accounts posted to Companies House show the total amount owed to creditors but not to whom it was owed.  As mentioned before I have no access to emails, accounts or invoices. 

You've already said there are 'significant' creditors, but please could you give some details of the actual amount owed to creditors in the last set of accounts and in the previous year (there'll be comparative figures, so it shouldn't be difficult to spot them), and also what the balance sheet shows as the net liabilities figure for this year/last year? Also - have you read through the whole set of accounts to see if there's any 'interesting' information if there are any notes to the accounts included?

Could I also ask whether the accounts appearing on Companies House's website are shown as 'abbreviated', 'micro entity' or any other description?

It's worth contacting HMRC and asking if there are any tax liabilities outstanding. There are circumstances in which directors of limited companies can be held personally liable for unpaid taxes, including corporation tax, PAYE, VAT and NI, so it's a check which needs to be made - but I'd get some professional advice before going any further with that one.

Bear in mind (sorry!) that the last set of filed accounts may not be wholly accurate, and normally won't include any debts built up since the date to which those accounts were made up (usually the 'year end' of the accounting period in question) - and that date is likely to be much earlier than the date on which they were filed at Companies House.