Voluntary Strike-Off Application Suspended – What Should I Do?

When you’re looking to close down your company, learning that your voluntary strike-off application has been suspended is sure to set some alarm bells ringing.

It means that one of your company’s creditors has objected to the process and put a firm stop to it.

This can have some major legal and financial consequences for you personally – not just for your business.

In this guide, we’ll explain why a voluntary strike-off might be suspended, the potential risks for directors, and how you can protect your interests.

Why Has My Voluntary Strike-Off Application Been Suspended?

When a company is struck off, it is removed from the Companies House register, ceasing its existence as a legal entity.

This shuts the company down, but – unlike liquidation – it doesn’t deal with any of the company’s debts. Creditors can then be left unable to pursue what they’re owed, leaving them in the lurch.

To help prevent this, voluntary strike-off applications must be advertised in The Gazette for at least 2 months before the company is dissolved. This gives creditors the opportunity to object and stop the process.

If your voluntary strike-off application has been suspended, chances are you’ve got a disgruntled creditor seeking repayment.

What Are the Risks of Voluntary Strike-Off?

Applying to have your company struck off isn’t a bad thing. For many directors, it’s a cheap and effective way to shut down a small or dormant company that they no longer need.

Problems arise when you try to strike off a company with unpaid debts.

When a creditor objects to your company being struck off, it is usually a precursor to legal action. If you appear to be trying to avoid paying your debts, creditors will be inclined to issue a winding-up petition, forcing your company into liquidation.

Your company will then be shut down and have its assets sold by liquidators to repay creditors.

But that’s not all. Compulsory liquidation also results in an investigation into the directors’ professional conduct. The liquidator will review your company’s history to determine whether you’ve upheld your legal duties and protected the position of your creditors.

Trying to get your company struck off will likely be viewed as an attempt to dodge paying your debts. You may then be charged with misfeasance.

Misfeasance is a civil charge which carries a range of penalties:

Made personally liable for company debts
Hefty court fines
Disqualification from directorship (for up to 15 years)

To avoid this, you need to ensure your company affairs are settled properly.

What Can I Do if My Voluntary Strike-Off Action Has Been Suspended?

If your voluntary strike-off application has been suspended, you need to start thinking about how you’re going to settle your company’s affairs.

Thankfully, there are a few different options available to help you out.

Each solution is best suited for different situations, so it’s always wise to seek expert advice before trying to rush into anything.

Paying Off the Debt

This might seem a little obvious, but it’s still worth a mention.

Paying off your creditors is the most straightforward way to resolve the situation. This allows you to reapply and get your company struck off successfully. You’ll need to complete another DS01 form to do this.

Be careful, though—some directors attempt to solely pay off the creditor who objected to the strike-off, ignoring any other debts. This is not a good idea. Your other creditors may pursue action against you and find evidence of your preferential payments, which will result in you being made personally liable for the debt.

Paying off creditors is a good idea, but only if you can settle all of your debts. This isn’t an option for everyone, but don’t worry—there are a few other solutions you can consider.

Creditors’ Voluntary Liquidation (CVL)

Entering a Creditors’ Voluntary Liquidation is a cheap and effective of settling a company’s affairs.

A liquidator sells the company’s assets, using the cash to pay off creditors as much as possible. Any remaining debts are then written off.

As the most common form of company closure in the UK, a CVL offers many benefits to directors:

Relieves pressure from creditors in as little as 14 days
Safeguards you from misfeasance and wrongful trading charges
Allows employees – and directors – to claim redundancy
Fees usually covered by liquidation proceeds

A CVL offers a safe exit from an insolvent business. Debts are properly settled, allowing you to move on with your future.

Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement allows you to deal with your debts while avoiding liquidation.

The solution functions as a repayment plan, offering many advantages to struggling businesses:

Spreads out debt over 3-5 years
Greatly reduces monthly overheads
Freezes interest and charges on debt
Protects business from closure

If you’re set on closing your business, a CVA probably isn’t the right option for you. However, if you’re simply struggling with a temporary gap in your balance sheet, it could be exactly the solution you need.

You’ll need the backing of 75% of your creditors – by value – to enter a CVA. Our team will help you sculpt a proposal that is affordable for you and attractive to your creditors.

Speak to an Expert

If your voluntary strike-off has been suspended, it’s crucial you speak to an insolvency practitioner as soon as possible.

Our team will assess your situation and guide you to the best solution for you. A formal insolvency procedure will help protect your legal and financial interests, keeping debts with the company rather than carrying them over to you.

Get in touch today to book a free, no-obligation consultation.