Pursuing a claim against a dissolved company

We often hear the question ‘can you sue a dissolved company?’

During the current pandemic, many businesses have, unfortunately, “gone to the wall” sometimes leaving a lot of loose ends, and people “in the lurch”.

The good news is that a large number of businesses have appeared and many have thrived, especially the smaller more ‘agile’ ones – equally many businesses had an insurmountable challenge often because of the industry or sector they are in.

The answer to the opening question is, unfortunately, not black and white.

If a Company has been struck off the Register then it is essentially dead and it is impossible to either bring claims against the Company or to take action on behalf of the Company.

The question, therefore, turns from ‘can you sue a dissolved company’ to ‘how do you restore a dissolved company’.

First, we have to understand why a company would be dissolved.

There are many reasons why a Company may be dissolved but typically it is normally a failure to file annual returns and accounts on time. The reason for this may be complicated and it could be a deliberate action by the Directors to avoid making payment to creditors or it may well be that a sole director and shareholder of a Company has passed away and no one has taken over the day to day running of the company.

We have dealt with two cases recently where the death of the sole director and shareholder meant that a company was struck off. This meant that the assets of the company could not be realised by the beneficiaries of the deceased director and we were able to assist with regard to restoring the Companies to the Register, meaning that the Company was brought back to life and from a legal perspective it was as if the dissolution had never happened.

In these cases, the Companies were restored and the beneficiaries were able to appoint a Personal Representative of the deceased director to become a director of the Company and to ensure that the Company’s assets were able to be sold and distributed to the beneficiaries accordingly.

How far will the Court go when assisting individuals to restore a Company? This was considered by the Court of Appeal in the case of County Leasing Asset Management Limited and Others –v- Hawkes [2015] EWCA Civ 1251.

The Court looked at the factors that led to the Company being dissolved in the first place and the reasons for the restoration.

The Court was asked to consider if the limitation clock (the time period to bring a claim) could be extended to enable the Company to bring a claim. The Court made clear that the answer was yes but it must be considered whether it would be just to provide another opportunity for the Company to bring a claim if it had failed to do so before it was struck off.

This case illustrates that the Court will take into account the conduct of the Company before it was dissolved.

We have the experience advise you as to if it is worthwhile you making an application to restore a Company to the Register.

We were large Law Firm of the Year for 2017 to 2018, and 2019-2020, as recognised by the Northamptonshire Law Society and can provide you with pragmatic easy to understand advice in relation to dealing with the complex issues in restoring a Company.

For further advice please contact David Farmer on 01536 410014 or our Client Services Team on 0800 088 6004.