My Company Has No Funds – Can I Still Wind It Up?
My Company Has No Funds – Can I Still Wind It Up?
It is entirely possible, even in cases where the business is unable to pay for formal insolvency procedures itself.
At BRI Business Recovery and Insolvency, we are here to help you. If you find yourself or your company in financial difficulty or are exploring ways to wind up your company, please contact our team.
Understanding Insolvent Company Closure
When a company is insolvent, it means it can no longer meet its financial obligations as and when they fall due, or its liabilities outweigh its assets. In these cases, directors have a legal duty to act in the best interests of creditors. This often means taking proactive steps to close the business or wind it up in a structured and compliant way.
However, if the company has no funds at all, you may feel stuck. The good news is that there are still routes available, and BRI Business Recovery and Insolvency is here to help.
Options for Winding Up a Company with No Funds
There are several ways to wind up a company with no funds. Here, we explain your options and the practical steps you can take if your limited company is out of money but needs to be closed down. At BRI Business Recovery and Insolvency, our team can help identify suitable options, so contact us if you would like some advice.
Option 1: Dissolution with Outstanding Debts (Strike-Off)
In some limited cases, you may be able to apply to have the company struck off the Companies House register, even with debts outstanding – though this approach must be handled carefully and thoroughly.
Companies House allows a company to be dissolved if it hasn’t traded for three months, has no active legal proceedings against it and its filings are up to date. However, if the company has creditors, they must be formally notified and invited to wind the company up and they have the right to object.
It’s important to note: This is not suitable for all insolvent companies and is usually considered only where there are no realisable assets and creditors are unlikely to object to the strike off.
Option 2: Compulsory Liquidation via a Creditor’s Petition
Another route is to invite your creditors to petition the court to wind up the company. This is known as Compulsory Liquidation.
Here’s how it works:
- Petition – A creditor (usually owed £750 or more) files a petition in court for the company to be wound up which is then served on the registered address of the company.
- Hearing – A hearing will be convened by the court to hear the petition to wind up.
- Winding up order – If the winding up order is granted, an Official Receiver is appointed as liquidator of the company and the business ceases to trade.
- Duration – The liquidation is likely to remain open for one year depending upon the level of assets and/or investigations being undertaken.
- Dissolution – The company is dissolved three months after the liquidation is concluded.
A compulsory liquidation can also satisfy your legal obligations if the business is clearly insolvent and no other options are viable. A company or its board can also petition for it to be wound up albeit that costs money whereas a creditor’s petition means the creditor must pay for the initial costs to wind up.
Option 3: Creditors’ Voluntary Liquidation (CVL)
A Creditors’ Voluntary Liquidation is one of the most common ways to close an insolvent company. Typically, the company appoints an insolvency practitioner to oversee the liquidation of assets, communicate with relevant creditors, and ensure the company is formally wound up.
However, this is not usually possible where a company has no funds with which to pay for it. Whilst directors do not need to personally pay for a liquidation, occasionally where a company either has no funds and the directors are either unable to dissolve or compulsorily wind up or the directors would rather avoid those routes, then third party funds can pay for a creditors voluntary liquidation where this is the board’s preferred route.
Seek Professional Guidance Early
If your company has no funds and you are unsure of the next step, we strongly advise speaking with an experienced insolvency professional like BRI Business Recovery and Insolvency. Getting advice early allows time for;
- A proper assessment of your legal duties
- Avoiding personal liability (e.g. for wrongful trading)
- Identifying any route that may protect you or offer creditors a better outcome
Even if formal liquidation feels out of reach financially, there may still be a workable compliant solution, and we are here to work with you and help you find it.
Need Help Winding Up Your Company? We’re Here to Support You
At BRI Business Recovery and Insolvency, we specialise in guiding you through the complexities of company insolvency – even when resources are limited. If your company has no funds and you’re concerned about how to close it down properly, please contact us; we’re here to help.