Credit Assessment: INVENTIVE PATENTS LIMITED (07527374)

1. Credit Opinion: DECLINE

This application must be declined. The company is currently subject to a proposal to strike off at Companies House, which indicates the directors have initiated proceedings to dissolve the entity. Extending credit to a company in the process of being removed from the register carries unacceptable risk — the business is effectively winding down, and there is a material probability that obligations will not be honoured as the company ceases to exist.

Even setting aside the strike-off status, the financial position independently warrants a decline. The company is balance sheet insolvent with net liabilities of £4,054, cash reserves have deteriorated significantly, and the asset base is overwhelmingly concentrated in stock of questionable realisability.

2. Financial Strength: Weak — Insolvent Position

The balance sheet has deteriorated markedly over the past two years:

• Insolvency: Net assets turned negative in 2025 at (£4,054). Shareholders' funds are (£4,056), meaning accumulated losses have fully eroded the £2 share capital.
• Asset quality concern: Stock of £78,869 represents 85% of current assets. For a wholesale business under strike-off, this inventory may be difficult to liquidate at book value. There is no provision for obsolescence or write-down disclosed.
• Historical volatility: The company was deeply insolvent in 2016-2018 (net liabilities peaked at £61,564 in 2017), recovered to marginal solvency during 2019-2024, and has now reverted to insolvency. This pattern suggests structural rather than temporary financial weakness.
• Minimal tangible backing: Fixed assets are only £3,816 (net book value of plant and machinery), offering negligible security.
• Unlisted investments: Increased from £3,000 to £6,000. The nature and recoverability of these investments is unclear and represents an unusual allocation for a distressed entity.

3. Cash Flow Assessment: Poor — Declining Liquidity

Cash deterioration is severe: - Cash has fallen 80% from £33,816 (2023) to £6,830 (2025) - Current ratio: £92,470 / £70,333 = 1.31x — appears adequate but is misleading given the stock concentration - If stock were written down by 30% (a reasonable assumption for a business ceasing trade), current assets would fall to approximately £68,800, creating a current liability coverage shortfall

Creditor pressure is building: - Other creditors (predominantly trade) increased 30.5% from £38,982 to £50,970 year-on-year - This suggests the company is stretching supplier terms or accruing unpaid obligations - Bank borrowings have reduced (current: £23,608 → £12,117; long-term: £36,471 → £29,127), indicating the company is prioritising bank debt repayment over trade creditors — a classic sign of financial distress

Working capital headroom is illusory once stock realisability concerns are factored in. The company has zero employees and appears to be a passive holding/wholesale operation with limited capacity to generate cash from operations.

4. Monitoring Points

If any existing exposure exists, the following require immediate attention:

1. Strike-off status: Monitor Companies House daily. If the strike-off is suspended (e.g., due to creditor objection), this may indicate formal insolvency proceedings are imminent. Any creditor can object to the strike-off within the statutory period.

2. Stock valuation: The £78,869 stock figure is the single largest balance sheet item. Request a detailed stock breakdown and ageing report. Assess whether this represents saleable inventory or obsolete/patent-related assets with limited secondary market value.

3. Preferential creditor risk: The reduction in bank debt while trade creditors increase may indicate the directors are preferentially repaying secured/connected creditors. This could constitute a preference under insolvency law if the company enters formal insolvency within specified timeframes.

4. Connected party transactions: "Other creditors" of £50,970 may include director loans. Clarify whether directors are creditors — if so, these may rank alongside or behind bank debt in a distribution scenario.

5. Investment nature: The £6,000 in unlisted investments should be investigated. If these are shares in connected or group entities, they may have no independent realisable value.

6. Confirmation statement overdue: The confirmation statement due 5 June 2026 is already flagged as overdue, suggesting administrative neglect consistent with a company being wound down.