If a company that owes you money closes down, how do you get it back?
In a previous blog, we talked about what it means for a company to be struck off – what happens to the money, equipment, and property of that business when it closes.
In most cases, a company is closed due to not being able to pay its debts (it may be classed as insolvent), and the assets are sold off to help pay them off.
Sometimes, a company is closed despite being able to pay its debts (it’s still solvent), and the debts aren’t settled before this happens. Businesses, perhaps including yours, are still owed money.
If that’s the case, here are your options for getting it back…
Have the company restored
There are two options to have a company that owes you money restored (brought back from the dead), by administrative restoration or a court order.
Administrative restoration of a company
It’s possible to restore a dissolved company without a court order if you were a director or shareholder of the company at the time it was dissolved.
The first option is applying to Companies House for an administrative restoration – in effect, to undo the closing down process.
You can do this provided the following conditions are met:
- The company was struck off the register under section 1000 or 1001 (‘Registrar’s power to strike off defunct company’) of the Companies Act 2006; e.g. the company failed to deliver confirmation statements or accounts to Companies House and/or failed to respond to further communications from the registrar.
- The application for administrative restoration is being made by a former director or shareholder of the dissolved company.
- The company was struck off the register and dissolved by Companies House within the last 6 years.
- The company was trading at the time it was dissolved/struck off.
The method to apply depends on the type of company:
Limited Company – you’ll need to complete form RT01, which is called an “Application for administrative restoration to the register”.
Limited Liability Partnership – you’ll need to complete form LL RT01.
You’ll also need to send a cheque or postal order for £100 to Companies House, which is the fee they charge to process the restoration. Companies House will also expect any paperwork that wasn’t filed (i.e. confirmation statement, or annual accounts) to be submitted.
Finally, if the company was dissolved with assets, you’ll need to include a waiver letter. This is provided by the Crown to state their consent for the administrative restoration
Within around two weeks you should be notified about the registrar’s decision to restore the company.
But what if your application is refused?
Restoration of a company by court order
You can apply for a court order to have the company restored if any of the following are true:
- you did business with the company
- you worked for the company
- the company owed you money when they were dissolved
- you’re responsible for the company’s employee pension fund
- you and the company have a shared or competing interest in land
- you were a shareholder or director of the company when it was dissolved
It’s also worth noting that if the company was dissolved more than 6 years ago, or the company was dissolved voluntarily, you can’t apply for administrative restoration. A court order is your only option.
Restoring a company this way is more complex and time consuming than administrative restoration, and we’d always recommended you seek independent and expert legal advice before taking this route.
The first step is to send a completed claim form and witness statement to the nearest county court to the dissolved company that deals with bankruptcy. You’ll also need to include the £280 court fee.
If your claim is accepted, the court will issue a restoration order and send it to you. You must send this in turn to the Registrar of Companies. Once they have it, they’ll restore the company.
Claim money or property from the dissolved company
You may be able to claim money or purchase some of the assets from a dissolved company if you were affected by the closure of the business. These are usually discounted, and the process is known as “referring an asset”.
Examples of situations where you can refer an asset include:
- You’re the leaseholder of a property where the company owned the freehold.
- You want to buy or are affected by land owned by the company.
- You want to buy other assets of the company like shares, trademarks, or copyrights.
- You’re a shareholder trying to get cash held by the company.
To do this, you will need to approach the body representing the Crown. This is because when a company is closed down, any assets are classed as “bona vacantia” (ownerless property) and pass over to the Crown.
Who represents the Crown? It depends on where the company was registered and where the asset is situated, as each county has its own representing body.
How to refer an asset
Apply for a discretionary grant
If you were a shareholder of a dissolved company, you may be able to get back some of its assets through a discretionary grant.
However, the clue here is in the name – nobody is guaranteed to receive the grant.
How to apply
In England and Wales (but not Cornwall or Lancashire) you must apply to the Treasury Solicitor.
How you apply depends on whether the company can be restored or not, as we discussed in more detail above.
A final word of advice…
Under all circumstances, we advise that you get expert legal advice on how to claim back money you’re owed by a dissolved or struck off company.
And please remember that none of the methods mentioned above are guaranteed to get your money back.
What happens to the assets of a limited company when it's closed down?
The answer depends on the type of assets a company owns, and whether it has debts.