Debtor company dissolved or insolvent? What creditors can do

What you can do depends entirely on which of three states your debtor is in, so check the free Companies House register before you spend another pound. Heading for strike off: object at Companies House, for nothing, and the process halts. Already dissolved: the company no longer legally exists, so you cannot sue or enforce against it until a court restores it to the register. In liquidation or administration: it still exists, but you stop being a collector and become a claimant, submitting a proof of debt to the insolvency practitioner for a dividend that is often pennies in the pound.

It is heading for strike off: object, and object early

A company being removed from the register is announced first in The Gazette. That notice is your window. Any interested party, a creditor included, can object to the strike off, and Companies House does not charge for it.

You will need the company number and evidence that the debt is real and current: recent invoices, statements, signed orders, chaser emails. Supporting documents are expected to be recent, so a file that stops two years ago is weaker than one showing you chased last month. The window is short, usually around two months from the first notice and sometimes less.

A valid objection suspends the strike off while it is looked at. That does not collect your money, but it keeps a live company on the register that you can pursue normally, whether by letter before action or agency instruction. Objections are reviewed periodically, so if you object and then do nothing, expect the strike off to resume.

It is already dissolved: restoration is the only way back

Once the company is dissolved, it has gone. Its assets pass to the Crown as ownerless property, known as bona vacantia, while its liabilities do not follow. You cannot issue a claim against a dissolved company, and if you already hold a judgment you cannot enforce it.

The route back is restoration to the register by court order. Administrative restoration is only open to former directors and members, so a creditor applies to the court, generally within six years of the dissolution date. If restoration succeeds, the company is treated as though it had never been dissolved, which revives your ability to sue or to enforce, and the court can give directions to put you roughly where you would have been.

Restoration is a court process with legal costs, court fees banded on a published scale, and dealings with the Crown’s representative over any assets. It is worth doing when there is something to recover, for example a company that was struck off with money or property still in it, or an insurer standing behind the claim. It is not worth doing to reach an empty shell. Do the arithmetic first.

It is in liquidation or administration: prove your debt, manage your expectations

Here the company still exists but you have lost the ability to collect from it. Once a company is in administration, or has been wound up by the court, a statutory moratorium stops most claims and enforcement, and in a voluntary liquidation the liquidator takes control of the assets, so pressing on is futile even where nothing formally bars it, and a debt collection agency cannot lawfully press on regardless. Your job is to submit a proof of debt to the appointed insolvency practitioner, with invoices and contract documents attached, and then to watch the reports.

Order of payment matters more than the size of your invoice. Fixed-charge lenders are paid from their charged assets, then the costs of the insolvency, then preferential claims such as certain employee entitlements and specified taxes, then floating-charge lenders, with a ring-fenced slice known as the prescribed part set aside for the unsecured pool. Ordinary trade creditors sit at the back and share whatever is left, pro rata. This is why a judgment obtained on the eve of a collapse buys you almost nothing: a judgment is confirmation, not security.

Do still lodge your claim properly. Check for a retention of title clause in your terms, which can let you recover unsold goods you supplied. Check whether any director gave a personal guarantee, because that is a separate contract with a solvent person and is pursued in the ordinary way. And if the conduct looks wrong, creditors can report it to the Insolvency Service.

Is a winding-up petition ever the right answer?

Sometimes, but rarely as a collection tool. For a company debt that is undisputed and £750 or more, a statutory demand gives the company 21 days to pay, secure or settle, after which a creditor can petition to wind it up. It is a blunt instrument: it is public, it costs money up front, it puts you back in the same unsecured queue if it works, and using it on a genuinely disputed debt risks the petition being dismissed with costs against you. If the argument is about whether the money is owed at all, the small claims route is the correct one.

Scotland and Northern Ireland

Company law is UK-wide, so strike off, dissolution and restoration work in broadly the same way, but the courts and the insolvency machinery differ. In Scotland restoration applications go to the Scottish courts, insolvency for individuals is sequestration handled by the Accountant in Bankruptcy, and remember that the five-year prescription period extinguishes the debt rather than merely barring the remedy. In Northern Ireland restoration is dealt with by the High Court in Belfast, and corporate insolvency runs under Northern Ireland’s own legislation, overseen by the Department for the Economy.

The lesson for the next invoice

Almost every creditor who ends up reading a Gazette notice was chasing too politely for too long. A debtor that stops answering is not necessarily insolvent, but the two look identical from your desk, which is why a debtor going quiet deserves a register check the same week rather than another gentle reminder. Escalating an unpaid invoice while the company is still trading is the whole ballgame, because once it is in liquidation nobody, however good, can collect it for you.

If your debtor is still solvent and simply not paying, comparing your options costs nothing. On Collect Compare you can compare vetted UK debt recovery agencies blind, with names hidden until you choose, or let us match you to the right one. It is free for creditors: the agency you choose pays for the introduction, and no agency can pay to rank.

This is general information, not legal advice. Insolvency and restoration are technical areas with strict deadlines, so take advice on your specific debt before spending money on a court application.