How can you close the LTD company in this case?

[netcoolro]

My friend have a Limited Company since 2009. For 2 years, 2009 and 2010 the company has been dormant. He opened an on-line website to sell products to customers.

Some customers paid by phone with stolen cards for some products from the on-line website and now Streamline (the card processing company) sent him a charge back for those money because the real owner of the card complained that he did not authorise any transactions. The real problem is that the cards used in the process were Corporate cards from USA and the customer asked for the products to be shipped to UK. So, in this case, you can not expect that the delivery address will be the same with the address where the card is registered.

Because this friend of mine does not have this amount of money, and the products are shipped already, can he close down the company real fast and avoid that charge back. Of course he does not want to declare the company bankrupt because this will affect his personal credit status and maybe he wants to open another company in the future.

The company is not VAT registered. I was trading in the last 3 months. There are no assets, but there are under £1,000 in the company's bank account.


Can somebody please advise, if he can close the company down and how to do it in a legal way, fast and without complications?

[NotAllThere]

Why doesn't your friend post here himself?

I was trading in the last 3 months

[Wanderer]

Can somebody please advise, if he can close the company down and how to do it in a legal way, fast and without complications?

Sure, your friend can just cease trading and refuse to pay the debt then start a new company! This is called "phoenixing" and businesses do it all the time. The creditors will get very angry about it but there is not much they can do and if the debt is relatively small then realistically they will probably write off the loss without further action. There will be difficulties if you settle with one creditor immediately before going bust leaving another one out of pocket too.

Don't be expecting that it's possible to just walk away from a situation like this without consequences though. Look at it from the bank's point of view, if the company went bust owing you money, would you be inclined do business with the company director who has just phoenixed their company?

If the losses are relatively small and the business is a viable, ongoing concern then it may be better for the owner to take it as a lesson in business and either try to trade their way out of the debt (if there is a reasonable possibility that this could be done) or invest some of their own money to make good the shortfall.

This probably needs some professional advice from someone who can look at the full details and advise on the consequences for the director(s) personally but in very general terms, those are the options.