What is Liquidation?
In some cases, it may simply not be possible to rescue a company and the best course of action may simply be to close the business. If this is your only option, we can help make it as straightforward as possible realising that this will be a very difficult decision for most people.
- Members Voluntary Liquidation
- Creditors Voluntary Liquidation
- Compulsory Liquidation
Members Voluntary Liquidation (MVL)
Members Voluntary Liquidation is only applicable to companies which are solvent (ie they can pay all their debts in full). All debts must be capable of being paid within 12 months of placing the company into MVL together with the costs of liquidating.
Creditors Voluntary Liquidation (CVL)
A CVL is for insolvent companies which cannot pay their debts as they fall due or where the company has more liabilities than assets. The process begins with the directors acknowledging that the company is insolvent and instructing an insolvency practitioner to arrange shareholders and creditors meetings to place the company into CVL. It is critical for directors if they think their company may be insolvent to take appropriate advice. If you carry on trading and incurring credit knowing that you will not be able to pay for goods you could become personally liable for this. Taking the right advice and acting on that advice is essential to avoid this risk.
Any unsecured creditor who is owed at least £750 can petition the court for a winding up order against your company if the debt remains unpaid. The petition is often preceeded by a “statutory demand” or a “summons” so it is important not to ignore threats of legal action. If your company is served with a winding up petition you should take advice from a licensed insolvency practitioner. Even if you cannot pay the debt immediately there may be other options available to you. If a winding up order is granted you will have to immediately cease trading and a liquidator will be appointed to take control of concluding the affairs of the company including selling the company’s assets. You will also have to attend a meeting with the Official Receiver who will ask you questions about your company and the actions you took as a director.
It is important that you take advice immediately if you cannot pay your debts when they fall due as carrying on trading when you know this is the case could result in legal action against the directors.
Just because you are considering liquidating your company this does not necessarily mean the end of your business. We can help with advice on what options are available for your business.
We have a team of advisers who visit clients all over the UK.
For a no obligation discussion or more information on any of the above, call our enquiry team on 0800 085 1706, we’ll be happy to help.