Ltd Company Insolvency Cost

ES19901990

Hi All

Does anyone have any experience of Ltd company insolvency and how much it costs? Most likely will raise £10,000 through selling assets. Have a £13,000 loan owed and a Personal guarantee on some equipment of around £36000. 

Can the £10000ish from assets be used to pay the insolvency costs or do I personally have to pay as director?

Any help or advice much appreciated.

Bookworm105

at that size you will need to appoint an authorised insolvency practitioner
Liquidate your limited company: Liquidate a company you do not want to run anymore - GOV.UK

they will take control of the company bank account, sell its assets, take their own fee, settle creditors and then distribute any remaining funds in the bank account to the company shareholders.

the tax treatment of the liquidation is matter for professional advice to balance CGT against other tax relief 

ES19901990

Bookworm105 said:

at that size you will need to appoint an authorised insolvency practitioner
Liquidate your limited company: Liquidate a company you do not want to run anymore - GOV.UK

they will take control of the company bank account, sell its assets, take their own fee, and then distribute any remaining funds in the bank account to the company shareholders.

the tax treatment of the liquidation is matter for professional advice to balance CGT against other tax relief 

Hi Just to confirm, the assets are £10,000 not £100,000 so I am just worried about the shortfall and who pays the insolvency practioner as it would be a struggle for me to pay depending on costs?

Bookworm105

the liquidator will always take any money realised from sale to firstly pay their own fees before anything else.
I doubt that fee will be 10k, but also it would appear there may not be enough cash to settle all creditors?

if there are still other creditors outstanding then the liquidator may call in your DLA and personal guarantee so as to fund paying such people off. Impossible to say without seeing your books.
One plus point, HMRC no longer classed as a priority creditor if you owe tax or VAT.

MeteredOut

ES19901990 said:

Hi All

Does anyone have any experience of Ltd company insolvency and how much it costs? Most likely will raise £10,000 through selling assets. Have a £13,000 loan owed and a Personal guarantee on some equipment of around £36000. 

Can the £10000ish from assets be used to pay the insolvency costs or do I personally have to pay as director?

Any help or advice much appreciated.

It's not clear if the company has any liabilities. eg, has the equipment all been paid for? Is the £36K the cost or the current value including depreciation?

As above, the liquidator could call on your loans/guarantees to settle any liabilities over the £10K once their fees have been paid.

ES19901990

MeteredOut said:

ES19901990 said:

Hi All

Does anyone have any experience of Ltd company insolvency and how much it costs? Most likely will raise £10,000 through selling assets. Have a £13,000 loan owed and a Personal guarantee on some equipment of around £36000. 

Can the £10000ish from assets be used to pay the insolvency costs or do I personally have to pay as director?

Any help or advice much appreciated.

It's not clear if the company has any liabilities. eg, has the equipment all been paid for? Is the £36K the cost or the current value including depreciation?

As above, the liquidator could call on your loans/guarantees to settle any liabilities over the £10K once their fees have been paid.

Sorry I should say the £36,000 is a lease equipment so I will never own it and has no value.

So The £10k should pay the practioner then the £13,000 and the personal guarantee £36000 i will probably have to work out how to do?

ES19901990

Bookworm105 said:

the liquidator will always take any money realised from sale to firstly pay their own fees before anything else.
I doubt that fee will be 10k, but also it would appear there may not be enough cash to settle all creditors?

if there are still other creditors outstanding then the liquidator may call in your DLA and personal guarantee so as to fund paying such people off. Impossible to say without seeing your books.
One plus point, HMRC no longer classed as a priority creditor if you owe tax or VAT.

Sorry what does DLA mean?

MeteredOut

ES19901990 said:

Bookworm105 said:

the liquidator will always take any money realised from sale to firstly pay their own fees before anything else.
I doubt that fee will be 10k, but also it would appear there may not be enough cash to settle all creditors?

if there are still other creditors outstanding then the liquidator may call in your DLA and personal guarantee so as to fund paying such people off. Impossible to say without seeing your books.
One plus point, HMRC no longer classed as a priority creditor if you owe tax or VAT.

Sorry what does DLA mean?

Directors Loan Account.

MeteredOut

ES19901990 said:

MeteredOut said:

ES19901990 said:

Hi All

Does anyone have any experience of Ltd company insolvency and how much it costs? Most likely will raise £10,000 through selling assets. Have a £13,000 loan owed and a Personal guarantee on some equipment of around £36000. 

Can the £10000ish from assets be used to pay the insolvency costs or do I personally have to pay as director?

Any help or advice much appreciated.

It's not clear if the company has any liabilities. eg, has the equipment all been paid for? Is the £36K the cost or the current value including depreciation?

As above, the liquidator could call on your loans/guarantees to settle any liabilities over the £10K once their fees have been paid.

Sorry I should say the £36,000 is a lease equipment so I will never own it and has no value.

So The £10k should pay the practioner then the £13,000 and the personal guarantee £36000 i will probably have to work out how to do?

How can £36K lease equipment have no value? Who owns it? What is the guarantee for? Are there any outstanding charges for this?

Ignoring that (and assuming no other liabilities, no, eg, VAT due, no Bounce Back Loan), the company has assets of £23K (£10K cash and the £13K you owe it). The liquidator will take their cut and the company has the remainder to be distributed as agreed. Assuming the funds will come back to you, the liquidator may decide whether to "call in" your loan before distributing the proceeds, or not. Are you 100% shareholder?

How long have you had the £10K DLA? Are you aware of the tax implications if you've had it for more than 9 months?

eg, (random google search)

https://www.crunch.co.uk/knowledge/article/directors-loan-account

I'd recommend getting proper professional advice. You will very likely have tax to pay on any distribution you receive, including the £10K in the DLA.

ES19901990

Hi sorry if I’ve not been clear here.

The equipment is leased and owned from the company I lease from. I have signed a personal guarantee for the lease until it is returned.

Apologies the loan is with HSBC not a DLA. I owe the company no money. (The DLA has the company owing me around £30000).

Bookworm105

ES19901990 said:

Hi sorry if I’ve not been clear here.

The equipment is leased and owned from the company I lease from. I have signed a personal guarantee for the lease until it is returned.

Apologies the loan is with HSBC not a DLA. I owe the company no money. (The DLA has the company owing me around £30000).

then the liquidator has, as you originally said, a shortfall of >£3,000+
After having paid themselves, they will need to negotiate with creditors to reach a settlement discount, both HSBC and HMRC (at least).
Looks like you can forget about the money owed to you as that will never be financed in your liquidation given the asset values you quote. The leased equipment is irrelevant, unless there is a penalty clause for "early" return of it payable by the company.