company active but builder declares they are technically insolvent

[1bertie]

We hired a ltd company to do an extension to our house. We paid 90% of the agreed cost, they built approximately 30% of the project and stopped coming, then sent us an unofficial letter saying they are going through insolvency (in jan 2023).
The company appears still as active as per companies house ( I called them). There's no insolvency case, no administrator that I can talk to. It sounds like false information the builder gave us.
Going through small court is quite expensive and even more so to sue for all the amount we lost.
I don't know if it is worth paying the fees for £10k in small court (we lost much more than £10k to them), if they really have no assets. Would we have a chance to get back £10k?
How can I know if they have any assests or funds to pay us back?
Is it possible that they lie saying they are going through insolvency if the company still appears as active? What can I do to hold the director responsible for this possible deceipt? Is small court dealing with this or who would investigate this in a legal capacity?
Any advice would be appreciated.
Thank you

[atticus]

A company that has no assets has nothing it can give you, judgement or no judgement.

What was 'unofficial' about the letter? Have you looked at the records of this company on Companies House website?

You have to decide for yourself whether legal action is worth pursuing. Do you have legal expenses insurance cover?

A case in the small claims track of the county court need not be expensive. You can DIY.

[Pezza54]

Unfortunately there is nothing to stop a managing director of a failing limited company from buying the company assets at market price, declaring the company insolvent, starting a new company and leaving behind unpaid bills and creditors.
I don't hold out much hope of you getting back any of your 60% of the contract sum. Unless you paid an initial deposit by credit card and the contract sum is under £30k?

[1bertie]

A company that has no assets has nothing it can give you, judgement or no judgement.

What was 'unofficial' about the letter? Have you looked at the records of this company on Companies House website?

You have to decide for yourself whether legal action is worth pursuing. Do you have legal expenses insurance cover?

A case in the small claims track of the county court need not be expensive. You can DIY.

Hi
I checked again and the company appears as active, with the same director in place.
Companies house says they have no evidence of it being declared insolvent.
They haven't filed their accounts according to gov.uk since december 2021 a so I don't know how much they are still worth. Is there a way to find out?

I said an unofficial letter because it is a piece of paper just signed by the director without any evidence that the insolvency is real, like a case number, or a legal person's endorsement, or any other official proof.

There's no administrator assigned for this so called insolvency according to companies house. How can it be proven or further investigated if the insolvency is real or not?
If we knew for a fact thay are still active and might still have assets it would make sense to go through small claims or higher and sue.

Thank you, B

[Pezza54]

The company director won't declare the company insolvent to Companies House until all the assets have been disposed of. Otherwise the assets become the property of the Crown.

[1bertie]

The company director won't declare the company insolvent to Companies House until all the assets have been disposed of. Otherwise the assets become the property of the Crown.

Thank you.
That means that the company might still have assets they have not disposed of?

[Pezza54]

Yes but if you decide to make a court claim by the time you reach the hearing (9-12 months) the director will probably have made a declaration to Companies House that his company is insolvent.

[Pezza54]

Tangible assets such as company van or vans, mechanical plant, tools, unused materials. All items that the director can purchase from the company.

[atticus]

The company director won't declare the company insolvent to Companies House until all the assets have been disposed of. Otherwise the assets become the property of the Crown.

Incorrect.

A liquidator or administrator will realise assets. It is only after the company is dissolved at the end of the liquidation or administration that any remaining assets (of which there should be none) will vest in the Crown.

[Pezza54]

Okay, but am I right in saying the director can purchase assets from his company before declaring it insolvent?

[atticus]

Yes, but doing so at less than market value would contravene the Insolvency Act 1986. Obviously the cash paid becomes an asset of the company.

[Pezza54]

Failure to submit company accounts on time to Companies House is a criminal offence under the Companies Act 2006 and the director may face criminal charges and/or fines up to £5k.
Are you able to find out if the company is still trading? Look for company adverts or ask a friend or relative to contact the company about possible building work.
If the company is insolvent or the director should be aware that the company is in serious financial difficulty (liabilities greater than assets) and the company continues to trade, then the director may be held personally liable for debts incurred.
You didn't say why you paid so much money to the company in advance of the work being done. Did the director ask you for money in advance? If he did this should have been a warning sign that the company was in financial difficulties.

[wales01man]

Failure to submit accounts can get a company struck off happened to us no fine no further action .

[Pezza54]

Just because a company is designated "Active" on the Companies House register doesn't necessarily mean they actually trading. There are companies registered at Companies House with the same sole director that were set up years ago and have regularly filed accounts with the same minimal £s for liabilities and assets year after year.
There is a chance that the contractor in this case has deliberately failed to file accounts and is waiting to be struck off

[atticus]

There are many possibilities. The certainty is that you are dealing with someone who does not want to finish the job or to return any money.