Do Nothing
If a limited company has few assets, if all of the assets are secured by a lender or if they are subject to a large Trust claim, it may not be necessary for the company to take any formal steps. Once the assets are seized by a creditor there is often little point in initiating any formal procedures. A company which is no longer trading, would eventually be struck from the records for the non-filing of annual corporate returns. Formal proceedings are only necessary if the directors are trying to save the company or if assets remain for the unsecured creditors.
Directors Beware
If a company fails to remit its payroll deductions or GST obligations, Canada Revenue Agency (formerly Revenue Canada) in many cases will have the right to pursue any Directors of the company for any amounts they are unable to collect from the company's assets.
Any individual who signed a "Personal Guarantee" on behalf of the company will also likely be pursued if the creditor cannot collect from the company's assets. Many landlords and suppliers will routinely expect the owners of companies to sign personal guarantees, to protect them if the company fails.
It is therefore common that the failure of a company will result in obligations for the owners and directors which may lead to personal financial problems for them.
Please contact us to help you evaluate your company's difficulties and to suggest a solution for you.