Striking off a company with debts

Striking off is not a way to walk away from a company’s debts. Companies House says voluntary strike off is not an alternative to formal insolvency, every creditor must be sent a copy of the application within 7 days, and concealing it is a criminal offence carrying up to 7 years in prison. Creditors can object before dissolution or apply to court to restore the company for up to six years afterwards, and directors of dissolved companies can now be investigated and disqualified without the company being restored.

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Is it legal to apply for strike off when the company owes money?

Section 1003 of the Companies Act 2006 lets the directors, or a majority of them, apply to the registrar to strike the company off. The Act does not say that a company must have paid every creditor before applying, but the rest of the process is built around creditors being told and given the chance to object. Companies House guidance is direct: strike off is not an alternative to formal insolvency proceedings, and if the company cannot pay its debts on time, or has more liabilities than assets on its balance sheet, directors should look at the insolvency options instead.

A company also cannot apply at all if it is the subject, or proposed subject, of insolvency proceedings such as liquidation, including where a winding up petition has been presented but not dealt with, or of a section 895 scheme with its creditors. So a director who files a DS01 to beat a creditor’s petition commits an offence. The mechanics of an ordinary, solvent strike off are covered in our guide to striking off a company using form DS01.

What offences can directors commit?

Companies House lists these as offences:

applying for strike off when the company is ineligible under section 1004 or 1005
giving false or misleading information in, or in support of, the application
not sending a copy of the application to all relevant parties within 7 days
not withdrawing the application if the company becomes ineligible

Section 1006 sets out who must receive a copy: every member, employee, creditor and director (other than one who signed) and the managers or trustees of any employee pension fund. Companies House says creditors include existing and likely creditors such as banks, suppliers, former employees owed money, landlords, guarantors, personal injury claimants, HMRC and the Department for Work and Pensions. Under section 1006(7), failing to notify with the intention of concealing the application is an aggravated offence punishable on indictment by up to seven years’ imprisonment, a fine or both. Companies House also warns that directors may be disqualified for up to 15 years.

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Do the debts disappear when the company is dissolved?

The company’s debts have no one to collect them from while it is dissolved, but nothing is wiped out in a way that protects the directors. Section 1003(6) preserves the liability, if any, of every director, managing officer and member as if the company had not been dissolved, and says nothing in the section affects the court’s power to wind up a company that has been struck off. Personal guarantees given by directors to banks, landlords or finance companies remain fully enforceable against the guarantor.

Anything the company still owns is lost to the shareholders too. Companies House guidance says the company’s bank account is frozen on dissolution and any money in it, and any other assets, pass to the Crown as bona vacantia.

How can a creditor stop or reverse the strike off?

Before dissolution, a creditor can object once the first notice appears in the Gazette. GOV.UK says the objector needs a reason, such as money owed or a legal claim, and evidence such as invoices. If the objection succeeds, the company will not be struck off for another 6 months, and Companies House expects progress towards resolving the debt, such as legal action, before extending that. Our guide on objecting to a strike off covers the steps, and HMRC’s approach is explained in HMRC objections to striking off.

After dissolution, section 1029 allows an application to the court to restore the company. The list of people who can apply includes anyone who was a creditor of the company at the time of its striking off or dissolution, anyone with a potential legal claim against it, and the Secretary of State. Under section 1030 the application must normally be made within six years of dissolution, although a claim for damages for personal injury can be brought at any time. Section 1031 lets the court restore a voluntarily struck off company where any of the requirements of sections 1004 to 1009 were not complied with, or in any case where it considers it just. On restoration, section 1032 treats the company as having continued in existence as if it had never been dissolved. See our guide to restoring a struck off company.

What happens once a creditor has the company restored?

A restored company is back where it was, debts included. A creditor will usually restore it in order to sue it or to petition for it to be wound up, and a compulsory liquidation brings in the official receiver or an insolvency practitioner with full investigative powers. That is where the risk for directors who used strike off to avoid creditors really lies.

A liquidator can apply to court to reverse preferences, for example where the company repaid a director’s loan or a debt the director had guaranteed ahead of other creditors (section 239 of the Insolvency Act 1986). The look back period is two years before the onset of insolvency for a person connected with the company and six months for others (section 240). Directors can also face claims for wrongful trading (section 214) and misfeasance (section 212), and an overdrawn loan account becomes a debt the liquidator will collect, and a conduct report to the Insolvency Service.

Can directors be investigated without the company being restored?

Yes. Since the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, section 6 of the Company Directors Disqualification Act 1986 requires the court to disqualify a person who has been a director of a company dissolved without becoming insolvent, where their conduct makes them unfit. An application must normally be made within 3 years of the day the company was dissolved (section 7(2)).

The Insolvency Service’s guidance says it may investigate a dissolved company’s director where, among other things, the director traded through a series of companies that liquidate or dissolve leaving debts unpaid, or did not comply with the rules when applying to strike off. A disqualified director can also face a compensation order under section 15A where their conduct caused loss to creditors of a company dissolved without becoming insolvent. The background is in our guide to investigations into directors of dissolved companies.

How might this play out?

Illustration only. A company owes a supplier £18,000 and HMRC £9,000. The two directors pay off the company’s overdraft, which one of them had guaranteed, file a DS01 and do not send copies to the supplier or HMRC. HMRC spots the Gazette notice and objects, delaying the strike off. The supplier only finds out after dissolution, applies to court to restore the company and then petitions to wind it up. The liquidator challenges the overdraft repayment as a preference to the guarantor director and reports the directors’ conduct. The directors now face a personal claim, possible disqualification and potential prosecution for failing to notify creditors, instead of the creditors’ voluntary liquidation they could have used at the start.

What should directors of a company with debts do instead?

If the debts can be paid, pay or agree them in writing before applying, then strike off in the normal way.
If they cannot be paid, take advice from a licensed insolvency practitioner. A creditors’ voluntary liquidation closes the company properly and deals with creditors fairly.
Do not pay connected creditors or guaranteed debts first; that is the classic preference.
If an application has been made and a creditor issue emerges, withdraw it rather than letting it run.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.