How Does the Liquidation Process Work?
When it comes to progressing with your company liquidation process, it is useful to have a clear summary on how the process is expected to work, in order for you to monitor where you’re at in the liquidation process and what is coming next. A good Insolvency Practitioner will of course keep you informed about each stage of the liquidation process in detail, but for now we’ll lay out the key stages involved so you can get a helpful overview.
Once you’ve looked over this page – and any others related to liquidation if you want to read in more detail – you can get in touch with us to discuss your company liquidation needs. We’ll be able to offer a free consultation to discuss your current financial needs and how the company liquidation process could work for you. Our team is available by phone or email, with details available on our Contact page.
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3 Key Questions on Liquidation Process
How Do the Directors start the liquidation process?
Firstly, once the directors of a business realise that their business is insolvent, they should contact an Insolvency Practitioner and appoint them as the liquidator. Once appointed as the liquidator, they will begin to try and understand the business, to ensure that a CVL is the most appropriate course of action. If the directors of the business are intent on closing the company, then a liquidation process will be the solution.
How does the creditors’ meeting work?
If the business cannot continue trading, and it is deemed that a Creditors’ Voluntary Liquidation is the most appropriate course for the business, approximately one month after the company ceases to trade a creditors’ meeting must be held. At this meeting, the Insolvency Practitioner’s appointment will be confirmed, however on rare occasions whereby a creditor such as the bank is a major creditor, they can formally insist that the liquidator is selected from their own panel, rather than those appointed by the directors.
In our experience, at the creditors’ meeting, there are very few (if any) creditors usually present, it is merely done as a formal procedure required by the company liquidation process. If you have been invited to attend a creditors’ meeting as a debtor we’d recommend attending, as this is when a statement of affairs is presented, which is prepared by the Insolvency Practitioner and details the current financial position of the company and informs all creditors about the liquidation process.
What happens after the liquidation?
Once the company has been liquidated it will no longer exist, therefore cease to trade. The liquidator must also investigate each of the directors to ensure that any actions during the time the business was insolvent still met their fiduciary duties. If they were found to be trading insolvent, the directors can be found guilty of wrongful trading and become personally liable for some (or all) of the company’s debts.
Furthermore, they could also be banned from acting as a director of a company for up to 15 years.It’s important to remember that liquidation isn’t always the only option, and it’s always essential to seek professional advice to explore other options that may be available to you. So, to speak to our expert team about your liquidation options and any other possible financial solutions available to you, get in touch today.