closing business?

J

jtk

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Mods: apologies if this is in the wrong forum
My parents (who are in their early 60’s) are the only directors of a ltd company. It trades as a millinery business(hat making) & they’ve rented the same small shop in a local town for the last 10 years, employing a woman part-time. The land-lord is looking to them to sign a 4yr lease but they’re holding off... now I know why....
I knew it wasn’t going well over the last few years but finally my parents opened up over the weekend & admitted that that the company hasn’t been making a profit for the last few years & because of the losses each month it’s not got a lot of money left in the bank – approx. €5,500 – they’re looking for me to say what I think is the best thing to do.... & I haven’t a clue!
The bills are mostly up-2-date (rent; electric; rates & wages are paid but other bills are about a month behind), they’re registered for VAT & that’s just about paid. The accounts are all up-2-date & they’re arranging a meeting with the accountant to get her opinion next wk. There are no business loans outstanding & if they closed down they think they’d have enough to pay everything off, but I’m not too sure about that...
The company doesn’t own anything save equipment used in the day-2-day running of the business (nothing big that would be worth money!).
They’ve been living off a pension that me da gets from his old employer (approx. €800 per month), they haven’t been taking a wage out of the company for years & only have €2,300 in savings in the CU.
I think their best bet would be to close down & try to sell anything they can to make as much money to pay off anything that is due & dissolve the ltd company status. But what happens to them then? Would they be eligible for Social Welfare? Where do they go to ask? Or is there a phone no. they can ring for advice?
Thanks for any help or advice you guys can give & thanks for reading
Jtk
 
They would not be eligible as they were paying class S contributions (or they should have been), they may however be entitled to one of the means tested allowances, certainly there is no harm in them going in an asking the question.
 
thanks for the replies, guys, much appreciated

my parents say that they were paying *a contribution* years ago, but don't know if it's been done recently, I've been trying to go thro' the accounts but I'm not that good at book-keeping :eek:

The accountant wasn't able to come in for the arranged meeting but she's due in tomorrow so I'm gonna try & attend & maybe get some answers then.

Parents said they were going to ring CAB but didn't, so I'm going to do it tomorrow for them.

will post back when I know more.

Jtk
 
Firstly they cannot to continue to trade if their business is to continue to lose money. So they have to reverse the losses or get out. Perhaps the business may be worth something if they were to introduce a younger partner. Seems a shame for so much experience to be wasted. But if it has to close your parents can apply for jobseekers allowance. This would be means tested and your dad's existing pension would be taken into account. So unless they own something other than their house they should be entitled to some payment. Your local social welfare inspector should be able to give some advice but beware as some people have been given incorrect broad sweeping replies which were completely wrong. Keep pushing and don't accept the first thing thrown at you.
 
update on situation

Thank you very much for your replies & apologies for my delay in giving an update, here is the situation-

I put your suggestion of a younger partner to them & apparently about 18mths-2 years ago they put feelers out about doing exactly that & they also put the business up for sale too but there hasn’t been any genuine interest & although they’ve left information out there, they don’t seem to think either will happen.

The accountant did come in & sit down with all three of us, she confirmed these points:

- The business is in dire straits & that it will not be able to continue more than a couple of months – if that.

- neither of my parents had been getting an income from the business for years, they were actually putting in money to keep it afloat

- because of the above there is a directors loan owed to them of approx. €6,500, a credit card bill of €3,500 plus other bills totalling approx €3,000 outstanding

- neither of them have been paying any social welfare Class contribution because they haven’t earned anything from the business

- Da’s pension (€800pm) has just about been covering their household bills; they live a totally meagre existence – 12yr old car; no sky tv; 1 mobile between them; no socializing, holidays or days out; don’t drink or smoke; shop in lidl; buy clothes from charity shops etc

The accountant says they should go for a winding up order which is simpler; cheaper & quicker than voluntary liquidation – would I be able to do this for them? Or does a solicitor/accountant have to do it?

I rang the CAB, didn’t get a whole lotta help if I’m honest, just a very generic ‘you may be entitled to this or possibly that…’

I couldn’t get through on the phone to Social Welfare so I went to the local office which was crowded, I waited two hrs to talk to someone & because I wanted to talk about my da he had to be with me (which he wasn’t) so I’ve to go back down & bring me Da with me!

Thank you for any other help or advice
Jtk
 
jtk said:
....The accountant says they should go for a winding up order which is simpler; cheaper & quicker than voluntary liquidation – would I be able to do this for them? Or does a solicitor/accountant have to do it? ....
Click to expand...

I assume you mean voluntary strike off, if the company has no assets or liabilites and all tax returns are up to date then you can do this.


From reading your posts, there is enough in the bank to pay all creditors apart from your parents, who could take a partial payment and write off the balance.

A letter of no objection has to be received from the Revenue, but it is a pretty simple proceedure.
 
If all the tax returns are up to date contact mystrokeoff.ie who will wind the company up for very little money (no connection with company). Heart breaking story - best of luck.
 
jtk said:
I rang the CAB,
Click to expand...

And on top of everything, you now have them a major criminals! :)
CAB = Criminal Assets Bureau
But I know you meant CAC = Citizens Advice Centre

It is a pity they waited this long, but possibly you could create a customer list for them and send out periodic letters offering a repair service for hats. This could be done as a sole trader and operated from a room in the house. It would offer a small extra income without the costs of materials and the charge would be just for their time.

If the customer list is strong enough, it may be a good option and if the demand was there, they could still make a few hats for special clients.
 
belated update

sorry for the delay in updating this thread but I've been working away for a couple of wks & didn't have a chance to fill you guys in ....

Mcaul, that's very funny & no I didn't mean to label them as criminals - sure that's the last thing they are!! such honest folk you'd go a million miles to meet & that's why they're trying to do the closure properly so they don't owe anyone anything.... :)

I put your suggestion to them about working from a room at home for a small income but at their ages (62 & 64) & after the struggles they've been thro' they really don't want to continue. & I can't blame them....

Simplyjoe, thanks for that & I'll be in touch with them failrly soon. Because of the dire financial situation we've decided that it would be best to close mid-Aug rather than wait until the end of Sept. They just haven't got enough money to carry on & it's pointless now, & too, now they've made the decision they just want it over & done with.

J.Ryan: no, the accountant definitely said winding up not voluntary strike-off as it was cheaper; quicker & simpler because everything (VAT; PRSI etc) was up-2-date) & by closing mid-Aug there would be just enough money to pay everything off.

Two weeks ago we all went down the social welfare office, they filled in the forms to apply for JSA. Had a brief interview & then were told to go home & wait to be contacted.

A guy came out to interview them on Tues, he took copies of their bank; CU; & last yrs accounts, said he would need to talk to their accountant & then get back to them....

Can anyone tell me what happens next? Any idea how long it'd take for them to hear? Do they just get a letter informing them of whether or not they're intitled to JSA?

Thnx a mill for all your help & advice.

Jtk
 
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