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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3692
Experience:  Solicitors 2 years plus PQE
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My business account was closed by my bank 5 mos ago for no

Customer Question

My business account was closed by my bank 5 mos ago for no reason at all. Sone say de-risking.
Our tiny/small limited company now operates as an agent or sub agent. We have no assets but our database. We are very near closing the company.
We received a letter from our bank claiming they have "in-goodwill" credited our account but regret not / failing in debiting our a/c for payment for the amount.
We can not fully and clearly find the "Goodwill" credit from our books. They have all the statements and docs showing the "goodwill " credit. (My belief is - they made a mistake)
What's our liability?
Thanks much.
Max
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Just to clarify are asking what your liability is to the bank or your liability for making financial statements? Are you dissolving the company?

Customer: replied 1 year ago.
We are not dissolving company. The bank is asking for us to pay the "amount" which we could not find in our books (after exhaustive audit). Q?? Liability: towards the bank. what can they do to us if we refuse to pay.Our arrangement with the bank including the (goodwill running loan) were all verbal.They would sometimes advance funds for us and debit (payment ) w/in 24 hours.They claim they failed to debit / collect from our account.This was in early Feb this year.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. Have they actually provided any proof of this debt? Are you confident that using the audit you have conducted you could rebut the presumption that this money is owing? If so, I would write to them, deny any liability for it and say they have not provided any proof and you cannot find evidence that this sum is due and owing. If they then want to pursue you, they would have to sue, in doing this they would have to prove the money is actually owed. You could use your audit as a defence to show the money is not actually owed. How much are they demanding?

Customer: replied 1 year ago.
How much will it cost them to sue us and how much will it cost us if they sue us and we'll need a lawyer? Ball park figure.Is it better to just close the company? There's hardly any business
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. It depends what the value of the claim is, and whether you need a lawyer will also depend on the value of the claim. How much are they demanding?

In relation to closing the business is the data base worth anything?

I would be most grateful if you would rate my answer in the mean time kind regards AJ

Alex J. and 2 other Law Specialists are ready to help you
Customer: replied 1 year ago.
Database not worth anything really.They're claiming £35kWhat do you think? Should we write them and tell them we don't have the funds and insist their audit is wrong. We can also tell them to try to get the funds from our principals where they sent the funds.Remember, we do not have access to the account (we couldn't deposit not withdraw funds) . It merely collected funds and forwarded sum total daily to our principals.
Customer: replied 1 year ago.
How much will it cost both parties if they were to sue?
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. For a sum of £35k it will cost them several thousand pounds to sue a company that has no assets. This would make any claim very off putting especially if there is no change of recovery of the money. Defending the claim would also be expensive, potentially up to £10k if you used external lawyers. Are you personally liable for this money at all?

Customer: replied 1 year ago.
We are a limited company so I don't think so. Unless you know of incidents that a "Limited Company" director was
Customer: replied 1 year ago.
That a director was held liable?
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. The only circumstance here would likely be if you had personally guaranteed an overdraft for example. I think if the company is not actually worth anything, I would write to the bank say you deny liability and if they sue you I would stop trading and let the company be put into liquidation. I doubt they would sue if they cannot really prove how the debt arose.

Customer: replied 1 year ago.
Can we stop trading and liquidate the company even if they sue us?
Customer: replied 1 year ago.
Is there a low cost lawyer maybe a government subsidize lawyer We can use just in case?
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. You can stop trading if you want, if you put the company into liquidation they would not be able to sue you, they would have to register the claim with the liquidator. I am afraid there is no legal aid for these types of cases. Kind regards AJ

Customer: replied 1 year ago.
Last question, how do I put the company under liquidation?
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. Aside from the £10k is the company actually insolvent aside from the £35k?

Customer: replied 1 year ago.
The company has absolutely NO ASSETS. No Liabilities......the Company Does Not Have a Bank Account. Clearly it has No Function. As income there's none from trading except collecting commissions from pointers fees.it gets a commission monthly of around £600 which goes to my partner.Since my partner now is the sole director, she doesn't want her name tarnished by having a "bunkrupt" or ccj record on her name.
Expert:  Alex J. replied 1 year ago.

Hi thank you. Putting the company into liquidation is an expensive process. If you want to wind it down stop trading and go through the dissolution process - if the bank object to you know whether they are prepared to actually pursue the money. As this money is not actually in the company accounts as a debt and is disputed you should be able to go through the dissolution process 3 months after you stop trading. In the mean time write to the bank and dispute the claim as I have outlined above. Kind regards AJ

Customer: replied 1 year ago.
Thanks very much for your advise. Hope all turns out well. All the best! Cheers!
Expert:  Alex J. replied 1 year ago.

No problem. I wish you the best of luck. Kind regards AJ

Customer: replied 1 year ago.
Sorry to bother last question :After unilaterally closing our company bank account, can the bank return to us (4mos after) claiming that we owe them funds (claiming their mistake)? Shouldn't a termination reflect completion? That they've done their accounting and due diligence. Can they still come back to us?
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. If you owe them money closing the account does not distinguish their right to claim - they would technically have 6 years before being barred. That said you may have various defenses (including one known as promissory estoppel - essentially this means you acted in detrimental reliance on the banks advice that the account was closed) they brought a claim, but ask yourself whether it is even worth defending it considering you do not intend to carry on trading the company.

Customer: replied 1 year ago.
We were given 30 days prior notice for closure. The bank upon closing our account refunded to us £1k remaining balance.Indeed as far as we are concerned our acctg confirmed our last £1k refundable balance.My partner find it a shame to dissolve the business since it's been operating 26 years with a valid license and earning a small/tiny profit.