Company Liquidation Enquiries
What is Company Liquidation?
Liquidation is typically defined as the process of bringing a company to an end before distributing all of its assets to claimants (creditors). It usually happens when a company can no longer afford to pay those it owes money to, but it can also be done voluntarily when a business is in a financially steady state. If you decide to liquidate your company, you will need a liquidator to take the reins and guide you through the process, which is exactly where we come in to help.
What are the Types of Liquidation?
There are actually three types of liquidation, and you can find each of them (alongside a short description) below:
* Creditor’s Voluntary Liquidation (CVL). This is where the company is insolvent and can no longer pay its liabilities, and is also struggling to continue trading. It is instigated by directors, and enables the liquidation process to be carried out quickly.
* Member’s Voluntary Liquidation (MVL). This is where a company is solvent, but the director wishes to close the company in a professional manner due to outside circumstances such as retirement.
* Compulsory Liquidation. This form tends to involve a court process, and it is very similar to bankruptcy. It can be instigated by directors, but this is not very common, and it is usually done by the creditors.
What Does a Liquidator Do?
The liquidator is also known as the insolvency practitioner (IP), and they work to run the liquidation process so that all legal requirements are fulfilled. Here are some of the key tasks that they will undertake:
* Completing all legal requirements
* Realising company-owned assets
* Distributing the money from assets to creditors
* Making staff redundant
* Investigating director conduct for the past three years
What is the Process Like?
First, you will get in touch with us so that we can assess your situation and take you through the options you have. We will always help you to make the best and easiest decision to minimise stress and time on your end. Once we have done this, we will move onto collecting the required information from you. We will need the following:
* Your books and records
* Details of all and any company assets, including cash and book debts
* Current list of creditors and liabilities, alongside how much is owed, reference numbers, and also names and addresses
Next, the creditors will be informed about what is happening through a formal notification. There may also be a physical meeting with the creditors to discuss the situation and the plans that are being made. A virtual meeting may also be possible, depending on the circumstances and availability of those involved.
The assets will now be valued, and once this is done, they will be sold so that debt can be paid off to creditors and other parties. Usually, the assets will go to auction, or there will be a pre-agreed sale. There may also be the option for you to personally buy the assets in question, but this depends on the situation. If there is any debt left outstanding, this can be talked through and settled with the creditors in question.
Are There Benefits to Liquidation?
As the owner of your company, there are some benefits to the process of liquidation:
* It prevents the situation with creditors from deteriorating any further, as well as reducing the chances of a wrongful trading action, and also allowing employees to claim redundancy from a government fund.
* It allows creditors to act quickly, as well as submit their claims in an organised manner.
* Creditor pressure is removed from you and the company as it allows for smooth movement.
* Further legal action is prevented, reducing stress and hassle.
* Allows for the best possible return for creditors via the company assets, so they can purchase it at a fair value. It can allow the business to live on, but also keeps all parties happy.
* There is usually no fee because it is paid for through the realisations of the company assets.
* Provides you, as the owner, with a clean break from the company so that you can start fresh.
Can You Liquidate a Solvent Company?
Yes, you can. Those who are in a financially stable situation but want to release equity that has been tied up in assets in a manner that is tax efficient can do so via MVL.
Can I Liquidate My Own Company?
No, you cannot. An IP must liquidate your company by law.
What Do I Have to Do as the Owner/Director?
You need to provide the books, records, list of assets, and liabilities for your company. You must be part of all and any creditor meetings that take place, and will act as chairman. However, your IP will essentially run these meetings and take the reins. When the IP asks for the information you are required to provide, you should remember that it is an offence to refuse.
Can I be the Owner/Director of Another Company After Liquidation?
Yes, but only if you have followed all of the rules and have not been disqualified. If you want to trade under a name that is the same or very similar, however, you will need to seek out legal advice.
Getting a Quote
If you think that liquidation is the next step forward, there is no need to worry; we are here to help you every step of the way. Whether you want a quote from one of our trained professionals, or you are just seeking general advice about the process, don’t hesitate to give us a call, or drop us an email, and ask for some more information.