Ltd Co Director passed away

Laura8192

I've been asked to help advise a friend (not client) as he has a friend who has passed away. The company was owned by husband and wife and husband passed away so now 100% owned by wife.

They want to close the company down, it is no longer trading, but the current accountant is saying that half the couples family home is an asset of the business. He says the husband signed his half over to the Ltd Co. So they are worried if they call in receivers, that the house will be sold and half the profit will be put into the hands of the receivers. The Accountant also cannot advise why the man signed his half of the house over, and can provide no paperwork. Land Registery still has the house in the husband and wifes name but Ltd co is showing half the value on its balance sheet.

It has been 6 weeks since the death and since the accountant was asked to wrap up the business but he is being, in my friends mind, quite elusive, he is still unable to confirm how much the company owes creditors, which is all the wife really wants to know. She is obviously upset at her recent loss and the threat of losing her house.

So my friend wanted to know if I could help, I said that I couldn't, as I cannot liquidate a company, but I said I would find out some colleagues opinions, and also he would like to know roughly what an accountant would charge to liquidate a company (something else the current accountant isn't forthcoming about) I know it is a how long is a piece of string question, but does anyone have any ideas?

Numbers wise, they have a turnover around the £750k mark, they have £100k in cash in the bank, but owe out to at most 20 creditors (biggest one sure to be HMRC). They also need to pay redundancies of around £20k.

jamesm96

Hi Laura,

I'm by no means an expert so don't take my word as definate, but here are my thoughts / questions that I'd ask:

Laura8192 wrote: »

I've been asked to help advise a friend (not client) as he has a friend who has passed away. The company was owned by husband and wife and husband passed away so now 100% owned by wife.

Is that for sure? His will didn't provide for the shares to go elsewhere? (it'd seem unlikely, but it's pretty fundamental!).

Laura8192 wrote: »

They want to close the company down, it is no longer trading, but the current accountant is saying that half the couples family home is an asset of the business. He says the husband signed his half over to the Ltd Co. So they are worried if they call in receivers, that the house will be sold and half the profit will be put into the hands of the receivers. The Accountant also cannot advise why the man signed his half of the house over, and can provide no paperwork. Land Registery still has the house in the husband and wife's name but Ltd co is showing half the value on its balance sheet.

Land Registry is your 'winner', surely? If it was 'signed over' then the 'signing' would have been on the Land Registry forms. And the Stamp Duty forms... was SDLT paid on transfer? Perhaps he leased part of the house to the company for the purposes of a 'Use of Home' expense? The fact that the property is on the balance sheet doesn't necessarily mean it's legally an asset of the company (legal form vs commercial substance?) Of course, if the property shouldn't have been on there then that's a separate issue, but at least the house should be quite safe from being sold.

Laura8192 wrote: »

It has been 6 weeks since the death and since the accountant was asked to wrap up the business but he is being, in my friends mind, quite elusive, he is still unable to confirm how much the company owes creditors, which is all the wife really wants to know. She is obviously upset at her recent loss and the threat of losing her house.

So my friend wanted to know if I could help, I said that I couldn't, as I cannot liquidate a company, but I said I would find out some colleagues opinions, and also he would like to know roughly what an accountant would charge to liquidate a company (something else the current accountant isn't forthcoming about) I know it is a how long is a piece of string question, but does anyone have any ideas?

It sounds to me like the accountant might be a little out of his depth; maybe procrastinating a little because of his / her 'mental block'?

We work with a liquidator who charges £5k + VAT, and the 'Statement of Affairs' which is required (prepared by us) is included in that. I've also met another liquidator who charges around £3,500 / £4k + VAT but, whilst he's been extremely helpful to me with advice here and there, I've never actually used him, and I couldn't say whether or not there'd be additional charges for the 'Statement of Affairs'... etc.

Laura8192 wrote: »

Numbers wise, they have a turnover around the £750k mark, they have £100k in cash in the bank, but owe out to at most 20 creditors (biggest one sure to be HMRC). They also need to pay redundancies of around £20k.

Is there no Aged Creditors report or Purchase Ledger... etc available from anywhere like Sage / QuickBooks, or a spreadsheet? I'd usually say that if affairs are pretty simple and there's sufficient cash to pay all the creditors, simply pay them and then close the business. But, if there's a risk that you don't know who all the creditors are then you want to play it safe and get a liquidator in, in my view.

As an aside, if there are insufficient funds with which to pay the redundancies after other creditors are paid (if, indeed, that's the right order - as I say I'm not an expert), then the redundancy payments can be paid by the Redundancy Payments Service out of the National Insurance fund.

Also, are there no debtors to pay-up?

Hope that helps in some way.

Mike.

Laura8192

thats really helpful thank you, reiterating what I was thinking anyway regarding the house, if land registry hasn't been changed then surely the company has no hold over it.

Thanks for your help I will pass my and your thoughts on to the friend. As I said they just wanted a bit of advise and a rough estimate of the fees involved so your info has been really helpful.