Liquidation is essentially the final option for an insolvent company. It involves selling all of the company’s assets and the proceeds being used to pay creditors, before closing the company down.

When to consider liquidation

You should consider liquidation if the company has no prospect of recovery. The liquidation process can be used to draw a line in the sand for the company and allow directors to move forward; before liquidation is considered all recovery options should be exhausted.

Voluntary Liquidation

Creditors Voluntary Liquidation (CVL) is initiated by the directors who, with shareholders, nominate an Insolvency Practitioner to wind up the insolvent company. Creditors formally make the appointment. The liquidator must be a licensed Insolvency Practitioner who will dispose of all company assets and share the proceeds with creditors in accordance with their adjudicated claims and priorities.

The liquidator will also report on the conduct of the directors in relation to the demise of the company. This may, from the Board’s perspective, appear hostile, though the liquidators will merely be fulfilling their statutory duty as required. This should show that the directors behaved responsibly and no wrongful trading took place.

Compulsory Liquidation

Compulsory liquidation is initiated by a creditor, or government agency such as HMRC, who can demonstrate that all reasonable steps to recover an undisputed debt have failed (e.g. debt collector). A winding up petition is served and a liquidator is appointed by the courts.

Either the official receiver or an Insolvency Practitioner will be appointed to act as liquidator.

Is it possible to continue trading after company liquidation?

In very rare circumstances, a company may continue to trade post liquidation, but this will be done by the liquidator not the directors.

How does a company liquidation affect directors?

Providing their conduct is satisfactory then no further action will be taken by the liquidator or The Insolvency Service.

 

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Request a confidential consultation with one of our insolvency specialists today.

Compulsory Liquidation

Compulsory liquidation is initiated by a creditor, or government agency such as HMRC, who can demonstrate that all reasonable steps to recover an undisputed debt have failed (e.g. debt collector). A winding up petition is served and a liquidator is appointed by the courts.

Either the official receiver or an Insolvency Practitioner will be appointed to act as liquidator.

Is it possible to continue trading after company liquidation?

In very rare circumstances, a company may continue to trade post liquidation, but this will be done by the liquidator not the directors.

How does a company liquidation affect directors?

Providing their conduct is satisfactory then no further action will be taken by the liquidator or The Insolvency Service.

 

Advice you can trust

For peace of mind, why not ask for our advice?
Request a confidential consultation with one of our insolvency specialists today.