Restored Limited Company recovering a debt owed.

[wrecked]

Dear CAG,

 

Please advise on the following problem.

 

I have a friend who was very very ill since 2017. He had problems with his heart. After a number of heart attacks, he had a quadruple bypass in January 2021. (His bypass was to have taken place during 2020 but of course, it was delayed due to covid)

 

While he was waiting for the bypass operation, his company was struck off by Companies House in 2019 because he failed to send the company accounts and other documentation. He failed to send them because of his illness.

 

He made full recovery after his operation and he then restored his company as soon as he was able during 2021.  

 

Prior to his illness his company was appointed as a commission sales agent for a manufacturing company (based in UK) in 2016 . During 2017, his company won a contract for this manufacturing Company for the first part of an engineering project.  His commission was paid in full by the manufacturing company after they were paid by the end user.

 

Even through his illness and heart attacks he was able to complete the second sale for the second part of the same engineering project. As a result, the manufacturing company won the contract for the second part during 2020. The manufacturer owes his company commission from the proceeds of this second order they received from the same end user customer.

 

The manufacturer refuses to pay the commission owed to his company saying that as it had been struck off, they are no longer obligated to make the payment. Any arrangement that was made prior to the company being struck off and for that reason, is null and void.

 

Our view is that the company being struck off is irrelevant because

 

a.       It is a continuation of the same project

b.       The company has been restored.

c.       The dissolution was merely due to an administration issue with Companies House as a consequence of his illness.

 

As the company has been fully restored the debt owed by the manufacturer is still valid, they are liable and they must pay.

 

According to the guidance notes on Companies House Website

(https://www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration/strike-off-dissolution-and-restoration)

 

Guidance.

Strike off, dissolution and restoration

Updated 24 March 2021

 

11.8 Once a company has been restored by the court

When a company has been restored to the register, the general effect is that a company is deemed to have continued in existence as if it had not been dissolved or struck off the register.

 

My friend is claiming the payment owed to his company. However, he may have to take legal action as I think the manufacturing company feels that they have the upper hand because his company has been struck off.  Even though it has been restored, the payment is no longer owed to the sales agent.  

 

Will my friend be able to serve a writ on the manufacturer as a last resort so he could get his money?

 

Please advise your views and comments on this situation so I can advise him and we an consider the next steps.

 

Thank you

Wrecked.

 

 

[BankFodder]

I don't know much about this area of law but what you are saying about the continuation of a restored company makes perfect sense. I can scarcely imagine that it is any other way.

How much money are we talking about here?

[wrecked]

Hi BankFodder,

Thank you for your reply. I feel the same way. As said in my first post above, it stated on Company House's website  :

"....deemed to have continued in existence as if it had not been dissolved or struck off the register...."

Which means the restored company is absolutely valid and can continue as normal, as if it had not been struck off. 

Value wise, it is a lot. 200K+ The project was in two parts, most of the work was done when he initially started in 2016 when he was well. The first order was in 2017. He received his commission payment. This second requirement took place in 2019  after he had his second or third heart attack. And thats the reason why he was completely off the grid and unable to submit papers to CH.

He did invest a substantial amount of his own money over the years whilst the project had been ongoing. But now the manufacturer is refusing to pay. This is why my friend has been absolutely worried sick.  He could easily lose his house over it. 

He is thinking that his only course of action is to serve a writ on the manufacturer and as a result he will have to meet the various costs required to proceed with this action. And that is why he asked my opinion. 

Like you, I was not sure as his company had been struck off. Thats why I reached out to CAG. 

My advice to him has been to try his hardest to try and impress on the manufacturer to pay without having to go to court. Of course, they are not taking his calls so he is having to email and write letters. He's now tearing his hair out and all I can do at the moment is to try and help him stay calm.  

I do not know what others in CAG think about this problem.

All the best

Wrecked.

[stu007]

Hi

 

I think you need to gather evidence before taking any action to back up your friend going forward if they need to take this further especially with the amount of money involved.

 

Make sure and download anything relating to the company from Companies House also do the same via the London Gazette  which is where notice are placed about companies including strike off/restoration of a company.

 

You should have added the full quote from the link you provided as it states:

Strike off, dissolution and restoration - GOV.UK

WWW.GOV.UK

 

I quote:

Quote

11.8 Once a company has been restored by the court

 

When a company has been restored to the register, the general effect is that a company is deemed to have continued in existence as if it had not been dissolved or struck off the register.

 

The Court may give directions or make provision to put the company and all other persons in the same position as they were before the company was dissolved and struck off. A notice will also be placed in the relevant Gazette.

 

 

London Gazette link: 

Companies | Company | The Gazette...

WWW.THEGAZETTE.CO.UK

 

 

On the above link look at the left side and either enter the Company Name or click Company Number and enter it and do a search for the company.

 

Have a good look at the Companies 'Time Line' you should be able to download the PDFs showing different notices about the company also make sure and bookmark/save the website links.

 

With Companies House and the phrase you mention I am of the same opinion as Bankfodder

 

[wrecked]

HI

 

Thank you STU - yes, of course I will check and go through everything as you advised.

I asked him not to do anything. A few more days will not make any difference. 

I told him I wanted to seek the opinion from CAG

 

Thank you

All the best

W.

[mantis shrimp]

If the company has been restored then it can pursue its claim for payment.  see s1032 Companies Act 2006:

 

Quote

 

1032Effect of court order for restoration to the register

(1)The general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.

 

 

Companies Act 2006

WWW.LEGISLATION.GOV.UK

---

An Act to reform company law and restate the greater part of the enactments relating to companies; to make other provision relating to companies and other forms of business organisation; to make provision...

 

This is subject to any defence the debtor may have, and also to any possible limitation of actions (this seems unlikely of the liability to pay arose in 2020).

 

In my last post I said "This is subject to any defence the debtor may have". The contract should be checked to see whether the debtor may have the right to argue that the fact of dissolution becomes a bar to payment, notwithstanding the subsequent restoration of the company to the register.

 

I guess there is no chance that the debtor paid the Crown, the debt being bona vacantia i.e. 'orphan' asset while the company was dissolved. If it did, then the debtor has discharged the debt, but it may be possible to recover payment from the Crown.

[wrecked]

Hi 

 

Thank you very much indeed Mantis . 

I really really appreciate your advice. 

He had high blood pressure Thursday so I left it, but told him I had good news from CAG and arranged to meet up with him on Sunday to go through this matter. 

 

Thank you again 

 

Have a good weekend 

Warm Regards 

W.

Edited January 22, 2022 by wrecked
Spelling errors

[wrecked]

Dear All,

 

Please accept my apologies for being silent for the last couple of months. I am afraid I had a heart attack at the end of January and ended up having a triple heart bypass. I am doing well now - just taking it easy. !!

 

My friend was extremely grateful for your comments and advice which he followed. He consulted a dynamic solicitor and is chasing this debt quite vigorously. He advised me that he employed a credit controller to chase the debtor. I will get back and update you on the progress. 

 

Thank you CAG - again.

 

Have a great weekend.

Wrecked.  

[mantis shrimp]

Sorry to hear about your problem, best wishes for a complete recovery. 

 

And good news that your friend is pursuing this case. 

[wrecked]

Thank you, Mantis .. so far so good ...as they say.

He is away at the moment and I will have a detailed talk with him on his return next week.

I will update if there's anything new.

 

Best/Wrecked

 

[honeybee13]

Thread reopened.

HB

[wrecked]

Dear CAG

Firstly, thank you to HB and dx for re-opening the case.

 

So, we spent the last three months trying to reach a solution with the debtor because he sent a without prejudice email to my friend declaring that he “wanted to meet, discuss the whole thing and pay something”.  But, the meeting never took place because my friend asked for an agenda, a settement figure  and then advised the debtor that my friend wanted me to accompany him to the meeting. The debtor stressed he wanted a one-to-one meeting only and would not disclose anything else. After that, we heard nothing more from him.

I believe we have no other choice but to go through the courts to recover the debt. My friend does not want to use his solicitor as the fees are prohibitive. He will pursue the case himself. He asked me to help him even though I advised him I was neither qualified nor knowledgeable enough.

We sent the debtor reminders for payment and formal letters requesting payment. There were no replies. Finally, at the beginning of this month, we sent a letter summarising the entire situation, highlighting on the agreement, stressing that the debtor had agreed to pay, reminding the debtor that he had paid for the first part of the work and this outstanding amount was owed for the second part as it was not only common knowledge in the industry but was confirmed by the end user that the project was to be implemented in two stages. 

My plan is to try and finish this case swiftly.  We want to apply for summary judgment on the basis that the debtor has no defence. Prior to commencement of the second project my friend obtained a cofirmation from the debtor that the debtor would continue to work with my friend as before, in the first project.  The debtor had not honoured the written agreement nor this additional agreement so, we want to serve the writ based on "Breach of Contract".

I believe I have built up the file accordingly and sufficiently over the last three months. 

But, I really need CAG to help me. Please advise me regarding:

a) the Pre-action Protocol

b) Your thoughts on us applying for Summary Judgment,

c) Specific court forms I need for submitting a Summary Judgment application

d) The correct interest rate to apply 

e) Please advise on anything else I may have missed out 

f) My understanding is we cannot serve this writ through MCOL so we need to serve the writ through a high court. I assume I need to serve the writ through a high court local to the debtor's company registered office address. 

g) Do I need to give " a title " to the writ or may I simply state

"Application for Summary Judgement  following a Breach of Agreement"

 

Thank you very much indeed for your help

Warm regards

W 

 

 

Edited June 28, 2023 by wrecked
spelling

[dx100uk]

urm...

dont you have to get a court judgement FIRST and then await atleast 33 days before you can go for SJ?

best bet might be to raise the court claim and when he looses send in HCEO to serve the writ ?

not my best subject, but is this is a B2B debt? and it's sum...£200K?

[BazzaS]

£200k? That’d be in the multi-track track of the County Court, and might even get transferred to the High Court.

 

I’d STRONGLY advise using a solicitor. Could a no-win, no-fee arrangement be on option for your friend?.

I’m suggesting this as although they may have a strong case, it’d be a shame to loose on some administrative point, and the defendant could then ask for significant costs!

[wrecked]

Hi    dx, BazzaS

Thank you for your messages. They are greatly appreciated.

Hi dx - yes B2B and >200K and yes based on my research we need a court judgement FIRST and then go for SJ?

Hi BazzaS  - ATM, We are preparing all the relevant papers for Pre-action Protocol and Claim to keep the costs down. When all paperwork is ready, we will then find a Solicitor. We are preparing the clam and completing the N1 form.

Please will some one clarify to me - do I issue the writ through Northampton County Court (NCC) or do I serve the Claim and N1 form direct to the debtor and forward a copy to NCC.  My experience is limited to MoneyClaim On Line.

 Thank you/W

 

[dx100uk]

not sure why you think SJ is necessary. if you win this is B2B you send in HCEO's...they can force entry and seize any business assets on a business property.. end of.

dont think MCOL is your route nor Salford as it's B2B and + £200k..not my bag sadly...as @BazzaS says go to a NWNF sols. he will deal. though they will take a % of the final sum.