I found out my client has dissolved their company without telling me - and they owe me money

[ohgodnowwhattodo]

I have been working with a client for two months, we are in a contract and the payment terms are within 28 days.

They had an existing website and were active on Companies House.

The first month there were a lot of excuses when it was time to pay, they then said they had paid and showed a 'receipt' but when I let them know I had still not receieved they told me they were querying with their bank and would sort ASAP. I stupidly continued the work because they also gave me a bit of a sad story and I felt bad. Clearly wasn't thinking with my business head on.

Anyway, they currently owe me 2,200. I sent them an email to tell them I would be stopping any further work until payment had been made, and my email bounced back - which I thought was strange.

I then looked on their Instagram to see if I could message them on there - and it had not been posted on in a month.

I then went to their website to see if I could use their contact page.. and the website would not load.

I had called the company number, to no avail - however luckily I was able to find a number for them through an expired contact page.

Before I called this number, I decided to look at companies house - and it turns out that they dissolved in May, one month after our contract had been signed.

I called and left a message as to what was going on - and asked about the dissolved company. I received no answer to the dissolved question, but she was shaky on the phone and insisted she had paid on a certain date through an american bank account - which was odd.

I gave proof that we had not been paid and she promised it would be done. I said I will wait a further three days before sending an official letter of action.

I know that it's illegal to continue trading once you've dissolved your company as the assets belong to the Crown - right? So what happens now? What do I do?

I have never incountered this before - does this implicate me? Can I still pursue payment? I genuinely did not know the company had dissolved until this week, and had not thought to check because in April, the company was active.

Any advice on where I go from here before seeking legal advice?

And, I know I've been incredibly naive! I've definitely learned my lesson.

I would report this thread to mnhq and ask to get it moved to the legal board.

You won't get useful answers here.

How was the company dissolved OP? If the company owes money it cannot be voluntarily dissolved. If it was wound up because it was insolvent then you might be throwing good money after bad. There should be details on Companies House or in the Gazette which tells you.

If they go bust, it's because they have no money. There might be insolvency practitioners who make a list of creditors who money is owed to, and work out who gets what. But I wouldn't get your hopes up.

I know it's not easy as a small business (as I guess you are) but due diligence will help you work out who to do business with - check out how long they've been trading, what their accounts show in terms of debt, do you know others who trade with them, etc. And first sign of trouble like non payment - down tools.

I think if a company continues trading after it's gone bust it might be classed as wrongful trading and you can hold the person directly liable as if they were trading as a sole practitioner - but she's probably got no money to pay you either way.

Was the company dissolved before or after they signed a contract?

Oh no…

Our contract started two weeks before this..

For a voluntary strike off the company can't have any debts. Unfortunately Companies House don't police this sort of thing. I would be inclined to cut my losses and put it down to experience.

I don't think you'll get anywhere. You'll pay more in legal costs tbh

This is why it’s payment up front for me. Burnt too many times by stuff like this. Sorry @ohgodnowwhattodo

One question, if the Company is dissolved and not trading, what work have you actually been doing for them.

Could she have dissolved the Company but continued trading as a sole trader?

is your contract with the company or with her personally?

It is hard to understand what they have been doing without being able to see the forms, particularly they started and then stopped and then it went final. however the key point is strike off is a solvent process and they should not have been doing any trading after starting. Doing this, and also not advising you as a creditor of the strike off (which you became when commenced work) are some of the criminal offences they may have committed. https://www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration/strike-off-dissolution-and-restoration#offences-and-penalties

I would probably write to them saying that in doing this they appear to have committed offences and that unless they can resolve the matter with you in 7 days by paying sums owed you will have no alternative but to report the situation to Companies House. Whether CH will actually do anything I don’t know but they do have a prosecutors department who might be minded to look at it if you do the heavy lifting for them of docs collecfion and the fact base.

There’s no money there. Just being legally or morally right doesn’t mean the other party has funds to pay you. Sorry OP.

You could pursue on the basis the Directors of the company can be held personally liable for debts on the basis of wrongful trading, but unless they’re sitting on lots of personal wealth it just isn’t worth it.

@Whitesandblueskies This is the thing - I work in PR. So I’ve been working on their brand awareness strategy. Up until yesterday, the site was active & selling items. I’m honestly so, so confused.

Get paid upfront?

Sadly I don’t think you will get anywhere with this now. It’s not right it’s definitely wrong but you need to move on.

Your client has lied to you and if you waste more time and energy it will cost you manpower hours that could be better spent on other clients and securing future work.

Focus on projects that are going forward and not this. Believe me I’m not saying this lightly as I’ve been bumped in the past with companies doing pre pack administrations etc. But this isn’t going to bankrupt you/your company and you will waste so much energy that will get you nowhere.

You could petition to restore the company. It'll cost you money, but it'll cause a world of faff for the directors.

https://www.gov.uk/claiming-money-or-property-from-dissolved-company/restore-company-court-order

Bottom line though is that if they don't have any money or any assets, it might be throwing good money after bad.

Do you know if any of the individual directors have money? You might be able to make an argument to lift the corporate veil and pursue a claim against them, but this would be tricky. You'd have to argue that they had acted improperly and been negligent in their statutory duties as directors.

For £2.2k... Honestly, I'd write it off unless I was exceptionally angry, in which case, I'd pay for further action but I'd do so with no expectation of recovering any money. It would purely be for the spite.

You could consider threatening action which is a bit more intimidating such as initiating legal actions to recover funds from the company or directly from the directors which might encourage them to act, but as others have said if they just ignore it would be a costly exercise which might nor bear fruit

Im not a corporate lawyer OP but there’s been many a time I’ve had to unpick companies financial status to ensure that I would get paid for my work done!

Looking at the summary they applied to strike off a year ago and a notice has to go into the gazette to warn creditors that they have to come forward if money is owed. If that happened a year ago but was suspended I wonder if it’s because a creditor applied (hence the temporary suspension) and their debt was settled (hence the strike off continuing). Yet they continued to trade because they wanted to maximise cash in the accounts for the directors. They wouldn’t have to put in a second gazette notice so there could be many others who have been screwed in that time!

That’s all speculation, but it’s still possible that the directors could have personal liability for the debts. And she could be prohibited from acting as a director in future. So it’s possible that there is something you can do!

As a learning point though - always do your due diligence! Check every company on CH before trading with them.