Can I liquidate a limited company myself?

Is it possible to liquidate a limited company on my own?

Liquidation is a formal procedure insolvency procedure which requires the input of a licensed Insolvency Practitioner to enter into. You are therefore unable to liquidate your limited company on your own, however, you are able to initiate the liquidation proceedings by enlisting the help of an insolvency practitioner yourself.

Liquidation can be entered into in two main ways; voluntarily or by a compulsory order of the courts. If you know your company is no longer required, you can make the decision to liquidate your limited company yourself, you do not need to wait to be pushed into liquidation.

When you make the decision yourself to liquidate your limited company, you also get to choose who you want to be the appointed insolvency practitioner. If the courts force your company into liquidation, however, this choice is taken away from you.

How do I start the process of liquidating a limited company myself?

There are a number of reasons why a limited company director may want to liquidate their own company. In many cases, liquidation is often chosen when a company's financial problems and escalating debt gets to a stage which becomes unmanageable and bringing the company to an end is the only possible way forward.

You can also use liquidation to close a profitable limited company, however. If you want to retire or no longer need the business, solvent liquidation can be the most tax-efficient way to wind down the company’s affairs and release the value from its cash reserves and physical assets. Again, you will need the help of an Insolvency Practitioner to put the company into liquidation and you can start this process yourself whenever you choose.

What are the different procedures I can use to liquidate my company?

There are three liquidation procedures. Two are voluntary meaning you can initiate these liquidation proceedings yourself. The other type of liquidation is compulsory and is forced on the business by its creditors by order of the court.

• Members’ Voluntary Liquidation (MVL) - Members’ Voluntary Liquidation is a voluntary procedure the directors can use to close a solvent company so they can retire or start something new. The liquidator will sell the company’s assets and distribute the money tied up in the company to the shareholders in the most tax-efficient way.
• Creditors’ Voluntary Liquidation (CVL) - The directors can initiate a Creditors’ Voluntary Liquidation themselves when the company is insolvent and cannot pay its debts. In this case, the liquidator sells the company’s assets and uses the proceeds to repay the creditors as far as possible. This procedure helps you fulfil your legal duty to protect your creditors’ interests so you can avoid adverse consequences such as personal liability issues.
• Compulsory Liquidation - Compulsory Liquidation is initiated by a creditor who has become frustrated with the business’s inability to pay a debt. The court will appoint a liquidator to close the company and repay the creditors as far as possible The risks of adverse consequences for the directors are greater as you have not taken steps to protect your creditors’ interests by initiating the procedure yourself. 

“Called for help with closing non-trading companies and Chelsea advised me on what to do and instead of taking advantage as others would by taking on the case and charging loads. She gave me a solution that would cost £20. Very pleased with the service and thankful for Chelsea’s advice.”

AB

 

Contact the Real Business Rescue Team today

Chelsea Williams
Business Debt Expert

Why can I not liquidate a company myself?

Liquidation is a formal legal procedure and therefore it must be administered by a licensed Insolvency Practitioner. While you cannot liquidate your company yourself, you can make the decision to liquidate yourself. When you know you want to liquidate your company, you will need to contact a licensed insolvency practitioner who will place your company into liquidation. They will also:

• Bring an end to the company’s affairs
• Settle any legal disputes
• Liaise with outstanding creditors
• Notify HMRC, Companies House, and any other interested parties
• Market and sell company assets
• Collect money owed to the company
• Pay the creditors
• Distribute capital to the shareholders 

Get a Quote Find Your Nearest Office

Do I pay for my company's liquidation myself?

The cost of liquidating your company is usually paid for by using the money raised when selling the company’s assets. If there are no assets, you may be eligible for director’s redundancy pay, which may cover the liquidator’s costs. If the company has no assets and you’re not eligible for redundancy pay, you may have to use your own funds. 

The other option for the directors of an insolvent company is to wait for your creditors to initiate the Compulsory Liquidation procedure rather than you starting the liquidation of your company yourself. In a compulsory liquidation, the court will wind up your company and you will not have to pay a liquidator’s fee. However, you will face increased scrutiny and must attend investigation hearings to explain why the company failed.

You must be extremely cautious about your activities once you become aware your company is insolvent. Continuing to trade when knowingly insolvent is a breach of your duties as a company director and you could find yourself in seriously hot water if you continue to operate and put your creditors at risk of incurring further losses.

How Real Business Rescue can help

At Real Business Rescue, our team of licensed Insolvency Practitioners can help you determine whether liquidation is the right approach for your business and guide you seamlessly through the process. Get in touch for a free consultation or arrange a meeting at one of our 100+ offices throughout the UK.