Where business recovery is not possible and your company is insolvent, we will guide you through the most appropriate formal procedure, assuring that your key stakeholders are valued and your risk as a director is protected as far as possible.
Liquidation is the formal process which closes down a company and repays its creditors through the distribution of its assets and there are three types:
Creditors Voluntary Liquidation is where the directors agree that the company is insolvent and must be closed. This procedure requires meetings of members and creditors to be convened to formalise the appointment of an Insolvency Practitioner as Liquidator. The court is not involved.
Compulsory Liquidation requires a petition to be presented to the Court which makes a winding up order. Initially the Official Receiver acts as Liquidator but often an Insolvency Practitioner is subsequently appointed Liquidator to deal with the company’s affairs. Winding up petitions are usually presented against a company by a creditor with a judgement debt in excess of £750 with an unsatisfied statutory demand or by the Crown.
Members Voluntary Liquidation is appropriate when a company is still solvent. It enables:
- The orderly winding up of a company
- Unlocking capital for shareholders (such as on retirement)
- Closing down of a subsidiary within a group which is no longer required, or as part of an internal restructuring
- Efficient tax planning
If you would like to confidentially discuss the difficulties facing your business then do not hesitate to contact us.