News and Blog

Welcome back for the weekly blog. This week's topic is "The options available to Directors of the Company if the Company cannot afford a Creditors Voluntary Liquidation."


Something Purnells have found during this recession/recovery from recession is that those Companies that are facing irrecoverable financial difficulty and needing to call an end to the life of the Company, simply cannot afford to do so.


Using the national average, the cost to place a Company into Creditors Voluntary Liquidation can be anywhere in the region of £5,000 plus VAT and the disbursements. Unfortunately a lot of Companies do not have that sort of cash in the bank or value of assets, hence why they are in the situation they are in.


The directors are then stuck. They know that the Company cannot recover from its situation but they cannot afford to follow the process that the law has designed to deal with its financial predicament.


Purnells can provide an effective solution to these companies.


The process is based on utilising the benefits of Sections 1003 to 1008 of the Companies Act 2006 (formerly Section 652 of The Companies Act 1985) available to the limited company.

This process  is used to have a company struck from the Companies House Register and dissolved when it is dormant.

The procedure also has the benefit of not being a formal insolvency procedure and is often called a cheap liquidation.



To commence the process, following instructions from the Director, a Statement of Affairs, is sent to the Company’s creditors. The creditors will be advised of the Company's plight and its intention to apply to have the Company struck from the Register. However that application cannot be made until the Company has ceased to trade for a period of 3 months.


After those 3 months, an application will then be made to Companies House to strike the Company from the Register and at that time the creditors would again be notified of the process within seven days of the dissolution forms being submitted to Companies House.


Companies House would then advertise the notice to strike off the Company in the London Gazette.


If no creditors objected within a 2-month period from the date of the advert, then the Company would be struck from the Register.


If creditors do object, then the strike off proceedings will be put on hold for a 6-month period.


On the expiry of those 6 months, Companies House would re-advertise the strike off notice in the London Gazette.


However during this period, the objecting creditor should be contacted to request that they withdraw their objection to allow the Company to be struck off or alternatively, to issue a Winding Up Petition against the Company.


The cost of the "Section 1003" process is approximately £1,500 plus VAT plus a £10 disbursement (the strike off fee required by Companies House).



I hope you have found this blog useful and should you wish to discuss the "Section 1003" process in more detail, please do not hesitate to get in contact. Telephone: 01326 340579, Email: ale@purnells.co.uk