Liquidate and Set Up Again The Following Week

J

jokerini

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Company A is a small single-member company service company that has one overdue debtor, the Revenue Commissioners. The company would only realistically be able to pay the debt over a two year period. If Revenue demanded full payment immediately, the company would not have the resources to pay the debt. The assets of the company are minimal.

If Revenue plays hardball, can the director simply liquidate Company A and set up Company B like a phoenix the following week without repercussions?
 
Without answering your question directly, it might be worth your while understanding the obligations of company directors, specifically in relation to personal liability where you continue to trade while a company is insolvent.

Depending on the amount involved, expect your creditor to seek to have you disqualified as a company director.
 
The director could face the following repercussions:

  • The director would be guaranteed to be made personally liable for any PAYE/PRSI liability that related to his/her salary.
  • The liquidator could sue the director personally for reckless trading.
  • The director could be restricted/disqualified.
  • The liquidator could sue "Newco" for any valuable goodwill/assets transferred across.
  • The Revenue could insist that Newco provided a bond before allowing it to register for VAT/PAYE
  • The Revenue could put Newco on its "Phoenix" register which would mean it would be closely monitored.
  • Newco would have to establish new credit ratings with suppliers/
It is for the above reasons that "honest and responsible" directors would fight to save their company from liquidation.

Jim Stafford
 
If you are genuine, revenue are very understanding and quite easy to deal with.
 
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