When your company is in a position whereby Liquidation is imminent, it’s important that you are aware of the time frames so that you can take necessary steps when needed to help both you and the business. The faster you can get all the paperwork in order, the easier it will be for the Liquidation process to be completed.
Below, we’ve outlined how long it takes to liquidate a company, as well as summarising the procedures involved.
What is Liquidation?
Liquidation is the official insolvency process of bringing a company to an end. The company is required to stop trading and any business assets will be sold to pay creditors what they are owed.
The two main types of liquidation are voluntary and compulsory. Depending on your business’s individual situation, you may choose to liquidate a business yourself, or be forced into it by your creditors.
What happens when a company goes into liquidation?
Depending what type of liquidation your company goes through, the process can differ slightly.
Voluntary liquidation is typically less stressful as the procedure can be planned in advance to minimise disruption. Insolvency Practitioners (IPs) will be able to guide Directors through the entire process, meaning that there is not actually too much for the Director to do once liquidation has started.
IPs will take the role of Liquidator and will use the plan in place to sell off any company assets and repay both the secured and unsecured creditors in hierarchical order.
You will be offered the opportunity to buy any of the assets you want to keep, should you have intentions of starting a new company.
However, a compulsory liquidation is triggered by an individual, usually a creditor, lodging a winding up petition with the court. Creditors will typically do this to recover any outstanding debt that is owed to them as the liquidation process involves the selling of assets.
If your creditors believe your company has valuable assets, petitioning liquidation may seem like the best chance of receiving their money.
Once the liquidation process is wrapped up and all the assets have been sold, the company is removed from the register at Companies House and will be closed down completely.
How long does it take to liquidate a company?
There are several steps which must be taken during company liquidation, and the process may take longer than you initially think.
- The appointment of a liquidator can take around 3-4 weeks. However, liquidation can happen within seven days if more than 90% of shareholders agree to short notice.
- Liquidators have to sell assets, conduct investigations and file all paperwork, which can take up to two years, if not longer. The larger the liquidation, the longer the process lasts.
- During compulsory liquidation, the time between the initial threat and end-of-court procedures can take around three months.
Liquidation procedures can take anywhere from three months to a year, due to a number of factors including approving liquidation, appointing a liquidator, the sale of company assets and agreeing on creditors claims.
Unfortunately, there is no legal time limit on business liquidation. The time scale can depend on your company’s position and the type of liquidation you’re undertaking.
How long does it take to close a limited company?
If a limited company is simply being struck off the register at Companies House, it can be closed in an expected time frame of around three months.
This is a procedure which cannot be rushed as it requires careful planning and precise execution.
It can then take a minimum of three months from application to dissolution, but this depends on the complexity of your business.
However, it is likely the actual liquidation process will take much longer than three months, especially if there are assets to dispose of.
How long does a Member’s Voluntary Liquidation (MVL) take?
The full timeline of a Member’s Voluntary Liquidation (MVL) takes around six months to a year to complete, but this depends on the complexity of the business.
The process involves several steps which can be time consuming:
- Appointment of an Insolvency Practitioner
- Declaration of solvency sent to Companies House
- Winding-Up Resolutions are made
- Informing Creditors
- Advertisement in The Gazette
- Sale of assets and distribution of funds
- Company removed from the register at Companies House
Whilst the procedures can take time, an MVL can be extremely beneficial to shareholders and directors.
How long does a Creditors Voluntary Liquidation (CVL) take?
Placing a company into a Creditors Voluntary Liquidation (CVL) is relatively quick, only taking around 2-4 weeks.
Although, just like any other liquidation case, the actual liquidation process can take much longer. Time frames will depend on the complexity of the case and the size of the company.
A general estimate of the timeframe of CVL cases is around 6 to 24 months.
For more information about timescales involved with the different Liquidation processes and for expert support, feel free to contact our team today for professional advice. Get in touch online or call us on 01204 208 158.