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My strike off application has been suspended: what are my options?

Voluntarily striking off a company at Companies House is a common method of business closure. It’s only suitable for solvent businesses and is typically a straightforward way to close down a company that’s no longer needed. It is also the cheapest way to bring an unwanted business to an end, however, it is not a process which is suitable for all situations.

When a strike-off application is made, all creditors must receive a copy of the application within seven days. Companies House also places a notice in the Gazette, which is the official public record.

This alerts creditors that may not have been notified by the business of the impending action and gives them two months to make an objection. So why might someone object to a strike-off application?

Why are strike-off applications suspended?

If you’ve submitted a strike-off application to Companies House and received a notice that it’s been suspended, it means that one or more of your company’s creditors have filed a formal objection.

They may have a legitimate claim against the company for monies owed to them, which would not be paid if the company closes down. When such an objection is received, Companies House suspends the application for strike-off until the matter is resolved.

The right to object to voluntary strike off is an important part of the process. It protects suppliers, customers, and other stakeholders of a company from the financial losses they could suffer if an application went through unchecked.

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Options when a strike-off application is suspended

Once you know who has made an objection and why your application has been suspended, you have three main options:

  1. Submit your application again with a view to it going through unopposed. This isn’t a recommended route and if your application did go through without issue, it’s likely to be restored to the register in the future if a legitimate creditor does exist.
  2. Pay off the debt: depending on your company’s financial situation and the size of the outstanding debt, you may be able to pay the creditor in full. This would allow you to reapply knowing that you’re debt-free and that there would be no further objections.

Place your business into voluntary insolvent liquidation: Creditors’ Voluntary Liquidation, or CVL, is the process your company needs to follow if it cannot afford to repay creditors.

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Key considerations before taking any action

It’s important to take the correct action in this situation as making a mistake could put you under severe scrutiny. Here are some considerations to guide your decision:

  • Voluntary strike-off is only suitable for solvent companies. If your company is insolvent and you want to close it down, you should place it into Creditors’ Voluntary Liquidation (CVL).
  • Deliberately trying to avoid paying your creditors is a serious offence and can lead to disqualification as a director, hefty fines, personal liability, and a prison sentence if serious fraudulent activity is uncovered.
  • HMRC aggressively enforces debt repayment and has the power to forcibly liquidate your company. This would lead to significant scrutiny of your actions leading up to the strike-off application.

Definition

Members’ Voluntary Liquidation (MVL) is a legal procedure for closing a solvent company. This process involves the orderly winding up of the company’s affairs, paying off all outstanding debts, and distributing any remaining assets to the shareholders. It is a voluntary process initiated by the company’s directors and approved by its shareholders, typically used when the company has fulfilled its purpose or the owners wish to retire or move on to other ventures.

Legal Framework

The Members’ Voluntary Liquidation process is governed by key UK legislation, primarily the Insolvency Act 1986. This act outlines the procedures and requirements for legally winding up a solvent company, ensuring that all steps are taken in compliance with the law. Additionally, the Companies Act 2006 provides relevant provisions regarding the responsibilities and duties of directors and shareholders during the liquidation process.

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