SLOPPY administration by Merseyside businesses is causing a dramatic increase in demand for Company Restoration Orders, corporate city lawyers are reporting.
Companies with poor control of their paperwork and statutory filings are being struck off the Companies House register, according to law firm Brabners Chaffe Street LLP.
Adrian Rogers, associate in the corporate team at the Exchange Flags-based firm, warned that businesses with overdue filings could face a time-consuming and costly procedure if they do not act quickly.
He said: "Recently, we have seen a very noticeable increase in the number of companies needing to be re-instated."
The most common scenario, he said, is when a property management company set up at the beginning of a development to manage the estate's freehold once the units are sold, is ignored as the project progresses and the relevant paperwork is not filed.
Setting up a new company to resume that activity is rarely a realistic option because assets held in the old company will not be transferable due to the lack of legal status.
"If funds need to be withdrawn from a bank account in the company's name or the company has other assets registered to it that need to be transferred, such as land, it will need to make a Company Restoration Order to enable it to do so," Mr Rogers added.
Companies House fires two warning shots before removing what it considers to be "inactive" organisations.
Letters will initially be sent to the company. Then, if no remedial action is taken - such as phoning Companies House and asking for more time to make the necessary filings - a notice appears in the London Gazette stating that after three months the name of the company will be struck from the register.
The procedure to restore a company begins with a court application and a witness statement detailing why the company was struck off and why the court should grant the order.
Mr Rogers continued: "Given that the court fee and the mandatory fees for the Treasury Solicitors office combined are almost £500, not to mention the late filing penalties Companies House may levy, it pays to be more thorough with your company administration."
Nick Palin, director of finance and administration at the Cheshire-based Federation of Private Business (FPB), advised companies to avoid serious future problems by starting out with proper administrative procedures.
Mr Palin added: "Keeping on top of paperwork is vital for a business to be successful.
"Indeed failure to do so can be a significant factor behind some firms being struck off.
"Help is at hand from the FPB, which provides a range of user-friendly guides to help entrepreneurs run their businesses."