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How to close company (from abroad) whilst issues with investor/lender

(aangepast)

Good afternoon,

 

I'm reaching out because of the following situation which I seek advice for:

- I have BV in NL

- I currently live abroad

- My BV still exists but is not active the last 4 years approx. (no expenses nor income)

- I would like to close it

- However, I cannot, because a few years ago (6 years approx.), I received money to my BV from a close contact who was going to participate as the CMO of the company (and who believed in the company). No contract was signed at the time of transfer. I sent the investment contract 6 months later (proposing % in the company and when they refused, offered loan agreement). The person saw that the company wasn't doing as well, the person was not doing well in their personal life too AND as well, this person was not acting as CMO (even disappeared for 6 months. The person came back after those 6 months and wanted their money back. I told them we couldn't cause the money had been invested. I proposed that company pays back as loan when company succeeds (a few years ago). They refused again.

- Have not heard from this person in the last 2 years.

- I can't close the BV until they agree to something (because eventhough a contract was not signed, our tax advisor has placed this transfer of money as a loan inside our financial accounting). Is this correct?

 

How can I best close the company considering the above? What steps can I take?

 

Thank you very much for your help.

aangepast door JdW2019
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5 antwoorden op deze vraag

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(aangepast)

About you and your plans:

Which country are you currently in and do you plan on ever getting back to the EU?

I read a lot of personal notes and feelings in between the lines, try to keep the it strictly business.

 

To the directorship of the company:

Are you the sole shareholder and the only statutory director?

 

The money transferred:

How much money are we talking about?

Did you receive the money on the company's bank account or on a personal bank account?

What did you do with the money you received and, what was the description thereof (i.e. investment, loan, etc.)? What did you do with the money?

Has the investor undertaken any steps or reminders to claim the money back, and if yes, what did he do up till now?

 

It all sounds very much like an undue payment to me, am I correct (there was no legal ground on which the amount was due and/or payable to the company)?

 

2 uur geleden, JdW2019 zei:

- I can't close the BV until they agree to something (because eventhough a contract was not signed, our tax advisor has placed this transfer of money as a loan inside our financial accounting). Is this correct?

No you can close down the company no matter the loans and contracts outstanding. This holds true for virtually every company in most countries in the world. Part of the contracts may become due and payable on your personal title, which might be undesirable, hence the questions above.

The actions of your tax advisor sound correct, based on the (limited) information you provided.

 

The straightforward, easy solution (a solution you were probably not looking for):

Can you organize the money and give it back (either based on fundamental beliefs or just to get out of this situation)? I understand that there are situations where this is not feasible, but can you imagine being on the other side of this deal?

 

Your post looks well prepared, so if and when you answer the questions above (which are specific), we can try to help you further.

aangepast door Remco TH
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(aangepast)

Hi Remco,

 

Firstly, thanks so much for your responses and your feedback. Appreciate it. I've responded here below.

 

About you and your plans:

Q. Which country are you currently in and do you plan on ever getting back to the EU? 

A. I'm in Spain and plan to stay in Spain whilst remaining flexible with travels in order to start and finalize this process

 

Q. I read a lot of personal notes and feelings in between the lines, try to keep the it strictly business.

A. Thank you - absolutely right. Not always easy though.

 

To the directorship of the company:

Q. Are you the sole shareholder and the only statutory director?

A. Yes, I am the sole shareholder and the only statutory director.

 

The money transferred:

Q. How much money are we talking about?

A. Approx. EUR 45.000

 

Q. Did you receive the money on the company's bank account or on a personal bank account?

A. On the company's bank account.

 

Q. What did you do with the money you received and, what was the description thereof (i.e. investment, loan, etc.)? What did you do with the money?

A. It was used in order to further develop the software (90%) which was required in order to present to awaiting clients, for the branding (8%) and for attending a stand to present the software at large event (2%). All the investment was used inside the company, for the company and for its' growth.

 

Q. Has the investor undertaken any steps or reminders to claim the money back, and if yes, what did he do up till now?

A. Yes, 2 times a reminder email (3 and 4 years back). I replied providing solutions in terms of returning payments (by loans) from the company once we were able to generate the first incomes. Unfortunately, the person refused.

 

Q. It all sounds very much like an undue payment to me, am I correct (there was no legal ground on which the amount was due and/or payable to the company)?

A. Sorry, what do you mean by legal ground and undue payment? They initially invested cause a big investor would jump onboard and they could become CMO. The big investor backed out. And a few months later, that person wanted the money back and considered a loan.

 

  5 hours ago, JdW2019 said:

- I can't close the BV until they agree to something (because eventhough a contract was not signed, our tax advisor has placed this transfer of money as a loan inside our financial accounting). Is this correct?

Q. No you can close down the company no matter the loans and contracts outstanding. This holds true for virtually every company in most countries in the world. Part of the contracts may become due and payable on your personal title, which might be undesirable, hence the questions above.

A. Do you mean that you can close down the company no matter the loans or you cannot? And in which circumstances does the contract become due and payable on personal title?

 

Q. The actions of your tax advisor sound correct, based on the (limited) information you provided. 

A. What actions can be taken, if it is possible to close down the company?

 

The straightforward, easy solution (a solution you were probably not looking for):

Q. Can you organize the money and give it back (either based on fundamental beliefs or just to get out of this situation)? I understand that there are situations where this is not feasible, but can you imagine being on the other side of this deal?

A. Because I am someone with fundamental beliefs of gratefulness and appreciation for that investment, I had proposed to pay it back on personal title, when possible, and a part of the amount - as it is not realistic nor feasible to pay back fully. However, this offer was rejected. Due to this, I am now considering other options. 

 

Q. Your post looks well prepared, so if and when you answer the questions above (which are specific), we can try to help you further.

A. Thank you Remco!
 

aangepast door JdW2019
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  • 0

A due and legal payment: if not, then there was no (legal) basis such as a contract or document on which the payment was based. As such the total amount would be due and payable to (in this case) the investor/lender.

 

14 uur geleden, JdW2019 zei:

A. Do you mean that you can close down the company no matter the loans or you cannot? And in which circumstances does the contract become due and payable on personal title? 

You CAN close down the company. If this is desirable is up to you.

 

From my perspective, I would do the following:

1) document the whole process (first contact with investor about investing, the process that follows and results in the EUR 45.000 being transferred).

2) document what happened with that money and how this matches the intentions of both parties at that time.

3) document how the funds were used, in line with the intentions for which the investment was made.

4) DO NOT FORGET: file all financial statements (all years) at the KvK, file all VAT and CIT returns for all the years with the tax authorities (as far as this is not done yet). As we don't know if there are any sector specific filings that need to be done, please make sure you file these to with the respective authorities. If you don't file all the reports this might be a possible ground to invoke "director's liability" under Dutch law. You want to prevent this in any case but in this case this is extra important as you already know that there is a creditor who might claim later when possible.

 

> Are there any other assets in the B.V.? If yes I would choose to liquidate these at maximum realizable value and try first to settle the debt (to investor/lender) with this available amount. This would make the the rest of your journey of liquidating easier.

 

After this, I would liquidate the B.V. which is a fairly easy process in NL (do not file for bankruptcy as this is useless as there is no income in the B.V. anymore). More info can be found in the topic below:

Note: If there are more debts than can be paid from the benefits/assets, the liquidator is obliged to declare bankruptcy (as is my experience anyway). If one does not do this, one runs the risk of being (personally) liable. As such, it is likely that the liquidator will have to go to court to file a report. Would advice against doing this yourself if you have never dealt with these kind of materials before. A good advisor probably isn't cheap but will save you a lot of (financial) pain afterwards.

If you are not sure how to do this I can recommend some advisors who have ample experience in liquidating companies for third parties, can do via PM.

 

Please let us know if you have more specific questions. Good luck.

 

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(aangepast)

Hi Remco,

 

Thanks again for your feedback.

 

Q. "A due and legal payment: if not, then there was no (legal) basis such as a contract or document on which the payment was based. As such the total amount would be due and payable to (in this case) the investor/lender."

A. Sorry, so if there was no legal basis such as a contract, the total amount would be due and payable to the investor > by the company? Or do you mean, due to lack of contract, this is not a loan/investment but instead, it's a "payment due"?

 

Q. From my perspective, I would do the following:

A1: Ok - should I file this to respective authorities too?

A2: Ok - should I file this to respective authorities too?

A3: Ok - should I file this to respective authorities too?

A4: This has been carefully done over the years - all the financial statements, yearly reports, expenses, incomes. Regarding the above, it has also been booked, as a loan in our filings. Would this be an issue?

 

Q. Are there any other assets in the B.V.? 

A. Ok I will double check with my accountant. However, I believe all assets have lost all their value over the last years (e.g. software has no value left I believe). And when I moved to other country, some of the assets (e.g. hardware) were sold in order to cover accountancy costs (keep in mind that the company has never really made any sales or profits - was innovative tech. too early for its time unfortunately).

 

Q. Note: If there are more debts than can be paid from the benefits/assets, the liquidator is obliged to declare bankruptcy (as is my experience anyway). If one does not do this, one runs the risk of being (personally) liable. As such, it is likely that the liquidator will have to go to court to file a report. Would advice against doing this yourself if you have never dealt with these kind of materials before. A good advisor probably isn't cheap but will save you a lot of (financial) pain afterwards.

A. Do you mean that if there are more debts that need to be paid off and can be paid from the benefits/assets, we need to declare bankruptcy OR simply, if there are more debts to others, we have to declare bankruptcy? FYI: There are no benefits/assets (to my knowledge) and there no others debts neither.

Yes, I will send you a PM for the good advisors when I get there. Thanks a lot Remco for these final points above.

 

aangepast door JdW2019
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Op 31-8-2019 om 12:27, JdW2019 zei:

A. Sorry, so if there was no legal basis such as a contract, the total amount would be due and payable to the investor > by the company? Or do you mean, due to lack of contract, this is not a loan/investment but instead, it's a "payment due"?

The actual facts and circumstances make it a loan or a investment.

 

Op 31-8-2019 om 12:27, JdW2019 zei:

A1: Ok - should I file this to respective authorities too?

A2: Ok - should I file this to respective authorities too?

A3: Ok - should I file this to respective authorities too?

Yes to all, in order to prevent possible director's liability I always file all these things before closing down a company.

 

Op 31-8-2019 om 12:27, JdW2019 zei:

Regarding the above, it has also been booked, as a loan in our filings. Would this be an issue?

In your case I don't think this  will be an issue.

 

Op 31-8-2019 om 12:27, JdW2019 zei:

A. Do you mean that if there are more debts that need to be paid off and can be paid from the benefits/assets, we need to declare bankruptcy OR simply, if there are more debts to others, we have to declare bankruptcy? FYI: There are no benefits/assets (to my knowledge) and there no others debts neither.

It is probably better to just liquidate the company when there is no income anymore and when there are no assets left. Declaring bankruptcy is not the way to go in this situation in NL as there are no assets/income anymore, which would lead to a more negative financial outcome for parties involved.

 

Op 31-8-2019 om 12:27, JdW2019 zei:

Yes, I will send you a PM for the good advisors when I get there. Thanks a lot Remco for these final points above.

Always welcome if you have additional questions. Personally I think closing down this B.V. your self would possibly lead to (possibly) expensive errors, that's why I think hiring a liquidator is the more intelligent solution. Succes.

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