Jason Elliott, at The Insolvency Experts, briefly explains the rules for businesses who are in the process of in liquidation but wish to continue trading. The simple answer to the question ‘Can a company continue to trade when in liquidation?’ is ‘no’ although there are exceptions in a limited number of instances. Directors should cease trading as soon as the decision to liquidate the company has been made, and failure to do so could land the directors personally liable for the debts of the company. The primary objective of a liquidation is to close down the business and cease trading completely. The liquidation process will be handled by an insolvency practitioner, and in most cases companies will not be given the opportunity to continue trading once the liquidation process has commenced.

The exceptions

If there are works to complete which would increase the return for creditors on the liquidation of the company, the insolvency practitioner can agree for the work to be completed. Equally, if it could assist debt collection the business may be permitted to continue trading in the short term. Directors should be cautionary however. Even if the business is allowed to continue trading for a short period of time, directors should be extremely careful to make sure no further credit is taken and no additional debts are accrued. Any decision in this period should only be made with the full consultation of your Insolvency Professional.

Contact us

Should you require advice as to whether your business is permitted to continue to trade whilst in liquidation contact our Insolvency expert team on 0300 303 8284 or at contact us by clicking here.