**Case Study** – Scrap Metal Company – Creditors Voluntary Liquidation (CVL)
DCA were approached by a director of a limited company in relation to HMRC arrears totalling around £82,000 in respect of VAT and PAYE. The director was unsure as to his options as he had not encountered this issue before and the problems began due to him being away from the business for some time. In his absence his son was left to run the business as he was a joint director, but whilst his son was good at this job he was not sufficiently trained to run the business solely.
The father had now returned to the business and had been trying to reduce the debts of the company, which also included a personally guaranteed bank overdraft. However trying to clear the debts whilst also running the business and trying to make a profit was becoming increasingly difficult. Added to this the landlord had served notice on the company that he was bringing their tenancy agreement to an end and therefore the company had no premises to trade from.
It was at this point that the director sought advice from his accountant who in turn referred DCA. At the initial meeting it was clear that the company could no longer trade and therefore was insolvent. After a few cups of coffee and further talks the client wanted to instruct DCA to place the company into liquidation.
The letter of engagement and notices were sent to the client that same day and returned to us the next day by the director, the virtual meeting date had been set and within a further few days the notices had been sent to creditors along with the relevant documentation.
In between the notices being sent to creditors and the date of the meeting the director ensured that the business was wound down and cleared the site for the landlord to avoid any dilapidations claim in the liquidation. However whilst at the premises he was visited by an enforcement agent who was being extremely aggressive and attempting to take items belonging to the company. DCA contacted the enforcement agent whilst he was at the premises and informed him that he was unable to proceed with the action as notice had been sent to both his employer and the creditor and under the Insolvency Act they would need to cease their proceedings.
After a few conversations with the agent and his company they agreed that they would no longer pursue the debt and would instead wait for confirmation of the liquidation.
On the day of the virtual meeting the client attended our offices and the meeting software was opened in order to formally commence the meeting. No creditors attended the meeting and the meeting was closed within 15 minutes.
The director successfully claimed for redundancy and arrears of wages from the Redundancy Payments Office. The director is now working for a company and the stress of the company and its debts is now a distant memory.