[Question] Closing down my company - how should I do it?

[Fumbled]

I started a company a few years ago, which was doing quite well. Over the past year things have been going badly and I’m not longer capable of running it. I've moved onto another job so that I can at least pay my personal bills, but the company is still open to take clients orders, because it’s also up for sale and the agent said it's better like this.

At the moment the potential buyer is dragging his feet and I've given the agent until the end of the month or I have to sell it.

I’m in just over R200 000 debt, which is owed to couriers, suppliers, overdraft, and customers who've placed orders, but we’re having trouble fulfilling.

I've tried speaking to my bank about this (FNB), but they don’t seem to care at all.

The company is a CC with maybe R2000 in assets.

Right now I’m in pieces as it’s so difficult seeing something you've built for years crumble to the ground. I know I’ll eventually pick myself up and try again, but this part is hard.

What do I do from here? How do I proceed?

[AmithS]

Always a difficult situation.

It is good that you have chosen to pick yourself up and continue building yourself. As you have rightfully mentioned this is the hardest part.

I am no expert in the legal aspects of businesses and I am sure other members will comment. Please also search the forum for other similar threads.

I would look along the lines of de registering or liquidating the business. This will however depend on many factors, example have you signed person sureties, etc...

Wishing you everything of the best

[Fumbled]

Thanks for the reply and support! It's ridiculously hard, but I'll get there in the end. Just need to be lead down the right path.

[Justloadit]

One important point, never take or even consider the fact that you are closing down as a failure!
It is not a failure, but an invaluable lesson for the next round.
You will pick up the warning signs much sooner the next time round, and will not find yourself in the predicament that you are in.

One thing is true, no one gives a rats ass about the fact that you owe them money. They simply will go to any length to get it, which in many cases will lead to legal ways or even threats to your life.

Most important is to sit down and come up with a plan of what you think you can do to settle the outstanding bills. The fact that FNB has not pulled the rug from under you at the moment, simply means they have faith in you and that they think that you will be able to repay the over draft. Continue using the account if the OD facility is still there. As long as there is movement in the account, then they will honour the OD and not close the account.

Once you work out a plan what you can afford to pay on a monthly basis your creditors, then go and visit each one personally and tell them straight. You are closing down, that you are short of finances, and that you have made a plan of action to repay, and that you will pay them Rx per month till the bill is settled. Also highlight the fact that if they go the legal route, that you will simply liquidate the company, and that there will be no money in it for them. So they must decide.

From my experience, 99% of them will accept, and the 1% will object and perform, and may even go the legal route. When the lawyer contacts you you simply state that you can not afford to pay in full and that you can pay them Rx amount per month. If their lawyers do not accept, then simply wait for a summons, as it will take about 3 months, in the meantime you pay what you said you would into their account. When you get the summons to appear in court, you then go to court and tell the magistrate that you are prepared to pay, and that you can afford the amount that you had told them in the first place, and that you have already been repaying the debt. The fact that you have acknowledged the outstanding monies, and that you are willing to repay the debt, will impress the magistrate to accept and the case will be remanded until you default.

You have to select a reasonable time to pay back the outstanding monies. I am not sure if you afford this.

[Greig Whitton]

Are you the sole member of the CC?

Have you signed any personal suretyships in the course of running your business?

Does your business employ anyone?

[Fumbled]

Justloadit, thank you for the response.

Are you the sole member of the CC?

Yes.

Have you signed any personal suretyships in the course of running your business?

I need to check with those specific suppliers I owe money too. I know for two of them I definitely haven't.

Does your business employ anyone?

No, it's just been me for the past few years.

[Greig Whitton]

If there are no other members, no personal suretyships, and no employees, then I can't think of any legal or regulatory impediments to closing your doors and walking away if the sale doesn't transpire. Per Justloadit's post, sort out your creditors and you should be fine. Of course, if you do cease trading, then you will need to notify the CIPC and, more importantly, SARS (the last thing you need are mounting penalties for tax returns that were never filed long after you stopped operating).

[AmithS]

What about the option of liquidating how does that work? anyone know

[Justloadit]

Liquidating under these circumstances is no easy task, and will require a sum of money up front to pay the liquidators, since the creditors have not called for it.
It will also require that a notice be placed in the newspaper to inform of the liquidation, and if no objections are received, then it can continue. Not sure if this will happen in this case.
Depending if surety's were signed, one is still personally liable for the outstanding amounts.

[Fumbled]

Thanks again for all of the responses. What I needed to do is check if any of the debt is personal surety.

Again it's still such a difficult task and trying to get it done while working a day job is next to impossible.

[AmithS]

Hang in there it will all work out


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