As a creditor, there are two reasons why you should be interested in companies on the strike off list. The first is that if a company that has applied to strike off owes you money, you need to know about the attempt to dissolve the company so you can object and claim on your debts. The second reason is that sometimes a company will receive a compulsory strike off notice when it fails to file its accounts with Companies House in time. This is a problem that can point to deeper financial problems. These issues may require you to take steps to protect your company from the potential of bad debt in the future. What Is a Company Strike Off? A company strike off is the process when a business is removed from the Companies House register and it ceases to exist. There are two types of company strike off:
What Does It Mean When Your Customer Is on the Strike Off List? When a strike off is implemented, the company no longer legally exists. It will cease to trade and all its assets, if it has any at the time of dissolution, will be given to the Crown. The process of dissolving a company is only available to companies that are solvent. Before a strike off, the company should take steps to ensure it has nothing outstanding. This includes completing all the work it has been contracted to do and paying any monies owed. The business owner should also notify all relevant parties about the strike off, including creditors. However, there are occasions when a company either intentionally or unintentionally applies to strike off without informing all parties. If this happens, the creditor may only find out about the attempt to close down the company when the strike off is listed. If they miss this notice, they may not realise the company has been dissolved until the process is finished. Once the company has been dissolved, it may be much harder to recover debts. What Happens If You Object to a Strike Off? If a company that owes you money has filed to strike off, you can file to object to the strike off as soon as it happens by contacting Companies House. It is also possible to object once a company has been removed from Companies House if it owed you money at the point of the strike off and you were not informed about the strike off. In this case, you must be able to prove that the debt exists. Why Did My Customer Receive a Company Strike Off Notice? Occasionally, a company with no intention of dissolving will receive a strike off notice from Companies House when it fails to file its accounts by the deadline and it hasn’t organised an extension. Filing accounts late and ultimately receiving a strike off notice can be a sign of financial difficulties. This is a fairly common occurrence: companies hit with striking off notices in 2019 include publisher Buzzfeed UK and construction firm Hochtief. If one of your customers has received a strike off notice, it is a good idea to take steps to clarify the company’s position and, if you think there is a chance the company will struggle to pay you, take steps to protect yourself. For example:
While the above steps are useful ways to protect your business from a failing customer, they are only effective if you know about the customer’s problems in advance. When a strike off is happening you need to know about it straight away, because if you leave it and the strike off goes ahead it will be difficult to recover any debts you are owed. An ICSM Alert helps by showing you the financial health of the businesses you work with, ensuring your customers’ financial issues do not catch you unaware. An ICSM Alert provides the following risk management features:
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