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Welsh Accountancy Practice Warns of Growing Number of Company Dissolutions

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The extended deadlines and the temporary pause of the strike off process to give companies affected by COVID-19 time to update their records filed with Companies House have now been lifted. So, we are, sadly, seeing more companies facing dissolution, warns Alun Evans, Partner at Bevan Buckland LLP.

However, if a company has been struck off or dissolved by Companies House against the wishes of the shareholders there may be a need to restore it so it can continue trading. Sometimes the reasons to restore a company might be to access a frozen bank account, realise pension funds or to finalise a lease or property transaction.

If you are in this situation, there is an established company restoration procedure that should be followed to reinstate a struck off company and you are likely to need a financial advisor to help with this process.

Alun Evans, Partner in Bevan Buckland LLP’s Haverfordwest office, said:

“If a business has been removed from the Companies House register, it is likely to have been dissolved voluntarily by the directors or struck off for not filing accounts or other statutory filings. But it is possible to restore a company after this has happened. There are two possible scenarios as explained below.

“If your company was forcibly removed from the register, the directors or shareholders can apply for administrative restoration via Companies House. You can only apply for administrative restoration if:

  • You were a director or shareholder of the former business
  • The company was struck off and removed from the Companies House register in the last six years
  • The business was continuing to trade until the time it was dissolved

“On the other hand, if the directors voluntarily dissolved the company and they want to continue trading, a Court Order is required to restore the company.

An application for a court order can be made by:

  • The Secretary of State
  • Any former director of the company
  • Any person having an interest in land in which the company had a superior or derivative interest
  • Any person having an interest in land or other property:
  • that was subject to rights vested in the company
  • that was benefited by obligations owed by the company
  • Any person who but for the company’s dissolution would have been in a contractual relationship with it
  • Any person with a potential legal claim against the company
  • Any manager or trustee of a pension fund established for the benefit of employees of the company
  • Any former member of the company (or the personal representatives of such a person)
  • Any person who was a creditor of the company at the time of its striking off or dissolution
  • Any former liquidator of the company
  • Where the company was struck off the register under section 1003 (voluntary striking off), any person of a description specified by regulations under section 1006(1)(f) or 1007(2)(f) (persons entitled to notice of application for voluntary striking off), or by any other person appearing to the court to have an interest in the matter

Alun adds:

“We are also seeing company owners come to us because they have taken out a Bounce Back Loan during the pandemic and this is preventing them from closing down the company, since HMRC or the bank objects to it.  This is, sadly, a common issue even though businesses owners have worked very hard to keep their companies afloat during these times of unprecedented difficulty. This is a tricky situation and it is wise to seek professional advice on how you can move forward.”