Can You Restore a Dissolved Company?

Published: 13/03/2020 | Last Updated: 17/05/2021

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Can You Restore a Dissolved Company – the full article

A dissolved company is one that has been formerly closed and removed from the Companies House register. But once a company has been dissolved can it ever be restored in future?

Once a company has been struck off the Companies House register it ceases to exist and can therefore no longer trade. Often this is the final nail in the coffin for a company.

However, there are circumstances in which a company that has been dissolved and struck off the register can be restored and returned to active trading. But how does this work and can your dissolved company be restored?

The liquidation and dissolving of a company can be organised voluntarily by the company directors. However, it can also be a compulsory process, which is when it is initiated by the creditors via a solicitor. An application is made to the High Court for a Winding Up Petition in order to liquidate the company and reclaim unpaid debts.

Depending on how the company was closed there are different processes relating to how the company can be restored. But how does this affect your dissolved business?

Administrative Restoration vs Restoration by Court Order

Administrative Restoration is a process under Section 1024 of the Companies Act 2006 which allows an application to be made to the registrar to restore a company that has been struck off, meaning that it once again exists as a trading entity.

This is only applicable under certain circumstances and is usually only eligible for those who have voluntarily dissolved their company rather than the company being dissolved following an insolvency.

Restoration by Court Order is the alternative method in which a company can be restored to the register and this is used in cases where Administrative Restoration cannot be applied for.

Administrative Restoration

In order for your company to be eligible for Administrative Restoration, there are certain criteria which need to be met before seeking approval:

– Your company must have been struck off the Registrar of Companies under section 1000 or 1001 of the Companies Act 2016. This makes the company non-existent in the eyes of the courts. It must also be made within a 6-year time frame from when the company was dissolved.

– The administrative restoration application must be made by a director or a shareholder of the company at the time of the company being dissolved. Employees and other people connected with the business cannot apply for administrative restoration on their own.

– The company must have been trading up until the time that it was dissolved.

Restoration via Court Order

It may be the case that your company is not eligible for Administrative Restoration due to one of the above factors not being met. In this care, the only way for your company to be restored is through a Court Order, which will begin the process of restoring the dissolved company.

– This can be applied for by people who were not shareholders or directors. This includes people such as creditors or liquidators, as well as anyone within a contractual relationship with (or interest in) the dissolved company.

– It must be within a 6-year time frame of the company being dissolved. This is also the case for the releasing of assets from the property of the crown. The only exception to this 6-year time frame is in the case of a legal claim (such as for personal injury) against the company.

The main differences between an Administrative Restoration and Restoration by Court Order are who can apply for it and the cost of the process. Administrative Restoration usually only costs around £100 (as well as any filing fees and penalty payments). A Court Order, however, requires £500 – £800 for the application, as well as court fees (around £280).

Are you a former shareholder seeking to claim money or property from the dissolved company? To do this you can also apply for a discretionary grant from the government. This will allow you to reclaim assets from the closed company without the company being fully restored.

What Happens to a Dissolved Company?

When a company is dissolved it simply means that a company no longer exists in the eyes of the Courts. Having been struck off the Companies House register, it is therefore unable to continue legally trading.

But the reality is that businesses and companies don’t just suddenly completely disappear when they cease to exist in the eyes of the Courts. So, what happens to the company once it gets struck from the register?

– The name becomes available to be used by other companies. While on the register, other companies are unable to use the same name as yours, but once it is struck off, that name becomes available to be used again. If you are restoring your company but your former name has been registered by someone else, you may have to change the name of your company.

– Assets come under the ownership of the crown. These assets are now considered as ‘bona vacantia’ (“ownerless property”), including any money, physical assets, intellectual property, copyrights, trademarks and property tied up in the business. Any bank accounts will automatically be frozen by the Bank upon receiving notice of the company’s dissolution. This property can be released in order to be claimed through a restoration via Court Order or a discretionary grant (depending on your relationship with the company in question).

What Happens to Debts When a Company is Dissolved?

If you attempt to dissolve your company whilst there are still debts outstanding and you have not already contacted your creditors to notify them, a creditor can object to the dissolution and the Registrar will suspend the strike off action

If no objections are raised the company will be dissolved. Any outstanding debts will then be written off. However, depending on the level of the debt a creditor may consider seeking the restoration of the company via a Court Order, in order to try and recover funds, perhaps by way of a liquidation.

When a company is dissolved, all assets of the company are either sold off or transferred out of the ownership of the business. The assets are sold at the going business rate in order to recoup costs and repay debts, meaning that by the time your company has been dissolved all of the debt has been repaid.

Is It Illegal for a Dissolved Company to Trade?

The short, sweet and rather blunt answer to this is: Yes.

Because it is no longer registered with Companies House, your company ceases to exist as a trading entity. If a company is still trading, then someone (either connected or unconnected with the dissolved company) is fraudulently operating under the same name and identity as the company.

To trade under the identity of a dissolved company is fraudulent and illegal. Because it no longer exists in the eyes of the Court, it isn’t being charged any tax and any money that it is making is undeclared.

If you believe that you are in business with a company that is operating under the name of a dissolved company, contact the relevant authorities immediately.

How Long Does Administrative Restoration Take?

Administrative Restoration is a far quicker process than a restoration through a Court Order. This is because it doesn’t have to go through the lengthy process of court proceedings. Because of this, an Administrative Restoration can take as little as 8 to 12 weeks.

However, the length of the restoration process does vary depending on the individual company, as well as the reason for the reinstation onto the Companies House register. For instance, if creditors are looking to reclaim any debt left unpaid then it isn’t necessary for the company to be fully restored as it is not going to begin trading again. This makes the process a lot quicker and easier than for a company to be fully reinstated as a trading entity.

Conclusion

So, in answer to the question raised, yes you can restore a dissolved company. However, the only way for a company to legally trade after it has been dissolved is to reinstate it through Administrative Restoration, a Court ordered restoration or to open a new business from scratch.