Company Liquidation may be the best option for your business if you’re experiencing financial issues or are approaching insolvency. It is crucial that you get in touch with a professional insolvency expert to discuss your options and whether liquidation would work for you.
You may want to liquidate your business voluntarily, this could be due to retirement, or you may be experiencing insolvency and need an Insolvency Practitioner to assist you in placing the Company into Creditors Voluntary Liquidation (CVL).
We’ll run through the basics of how you can liquidate your company and how our team at The Insolvency Experts will help.
What are my options for liquidating a company?
There are 3 main liquidation processes. These are:
- Creditors’ Voluntary Liquidation (CVL): A CVL is used when a company is insolvent and cannot pay liabilities – the Directors lead the process and creditors will be involved throughout.
- Members’ Voluntary Liquidation (MVL): This is applicable when a company is solvent, but the directors want to close it down.
- Compulsory Liquidation: This is where your company is forced into liquidation by the Court, upon the petition of a creditor who cannot be paid.
To begin the liquidation process, you’ll first need to understand the reasons behind your decision to liquidate:
- Is your company solvent or insolvent?
- What assets does the Company own?
- Who does the Company owe money to?
- Is this a temporary cash-flow issue that can be turned around (i.e. there is a sound underlying business)?
- Are creditors beginning to take/threatening to take action?
- What is the attitude of creditors? Will they support/allow further time for payments?
- Who are the registered directors?
- Who are the shareholders?
- Who are the charge holders (secured creditors)?
There is a lot to think about before you can liquidate your company. The help of an Insolvency Practitioner (IP) will allow the process to run smoothly and ease the stress of dealing with debts and creditor pressure.
How to liquidate a company with no money
Liquidation is a costly process. The costs are payable from assets of the Company (with the approval of creditors) or, in the absence of any assets, the costs must be paid by the Directors personally.
If your company has no money and/or no assets, then your options may be limited, however, the following 2 solutions may be available:
Your company has no debts
In this case, you can have your company dissolved and struck from the Companies House register. This process should be fairly straightforward – you would simply submit a DS01 form to Companies House, signed by the directors.
Your request for company dissolution will be published in the London Gazette and after 2 months, if there are no objections from creditors, your company will be officially dissolved.
Your company does have debts
If your company is in debt, whether that be to HMRC or to other creditors, a dissolution would likely be rejected. If you are unable to pay debts and do not take action to voluntarily liquidate your company (perhaps due to the company having no assets and you having no personal funds to cover the costs involved), you can invite creditors to issue a winding up petition.
The Company would then be wound up by the Court at a future point in time. The Official Receiver (OR) would become the Liquidator and the Directors would have to attend investigation hearings and co-operate with the OR to explain why the Company has been wound up.
If your company does have money and/or assets, you’ll need to look into Company Voluntary Liquidation or Administration.
How much does it cost to liquidate a company?
Company liquidation must be carried out by a licensed Insolvency Practitioner, so their fees need to be included when considering overall costs.
The cost of liquidating a company varies hugely depending on the issues faced (e.g. numbers of creditors/employees, directorships/shareholding, asset types and locations, etc.) The more complex the process is, the more work your appointed liquidator will have to do.
REMEMBER – The cost of liquidating your businesses is typically covered through the sale of assets.
Depending on the circumstances, a director may be able to claim for redundancy in the Liquidation which, in the absence of any assets, may be used to cover the costs.
How long does it take to liquidate a company?
It typically takes a few weeks for appointed liquidators to place your company into Liquidation. There is no set time frame as to how long the company liquidation itself could take – the length of the process is hugely dependent on your circumstances.
If possible, a Liquidator will look to conclude the liquidation and cease to act prior to the first anniversary of the appointment.
Can you liquidate a company and start again?
Technically yes, you can liquidate a company and start again with an entirely new business venture. You will have to follow an important set of rules firstly, to avoid trouble from the courts.
If you liquidate a company and want to start again, you’ll need to be aware of these potential issues:
- You musn’t become director or manager of a company with the same or similar name as your liquidated one;
- You may have to provide a security deposit to HMRC if your liquidated company was in debt;
- You may have trouble securing credit due to your history.
There are a lot of factors to consider when starting a new company after liquidating one – you’ll need to be wary of transferring employees, if you have any, previous personal guarantees and the purchase of your old company goods.
Liquidating a company with The Insolvency Experts
With the help of our Insolvency Practitioners at The Insolvency Experts, we can help you to successfully liquidate your company if this is the best option for your business.
You can talk to our insolvency practitioners directly for advice on financial issues in your business and how to liquidate your company. Get in touch today for a quote on company liquidation along with expert advice from our team.