Northern Ireland - Company Liquidation including CVL, MVL & Winding Up

What liquidation options are available to companies in Northern Ireland?

If you're the owner or director of company in Northern Ireland considering your options for closure, your first step is to ascertain whether your company is solvent or insolvent. 

If you are unable to pay your outgoings and other monthly contractual obligations as and when they fall due, your company may be on the road to becoming insolvent. If you are dealing with increasingly impatient creditors and are on the verge of being taken to court by its creditors, time is very much of the essence. Taking expert advice at the earliest signs of impending insolvency not only gives your company the best chance of effecting a successful turnaround, it also helps ensure you are meeting your legal responsibilities as the director of an insolvent limited company. 

If you've already been served winding-up petition, you can read more specifically on winding-up orders in Northern Ireland.

Types of company liquidation in Northern Ireland

There are two main ways a company can be liquidated in Northern Ireland – a creditor can force it into compulsory liquidation following non-payment of a debt, or the directors of the business can opt to initiate voluntary liquidation if they wish to bring the company to a close. Below we provide a detailed overview of both:

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Overview of Compulsory Liquidation in Northern Ireland

If your creditors are threatening to put you out of business, or if you've already been issued a winding up petition, your company is at least of compulsory liquidation.

A compulsory liquidation can be initiated by one or more creditors if the company has defaulted on a debt of more than £750 and has failed to comply with formal payment demands in a manner that is satisfactory to the petitioning creditor. 

To begin the process of putting your company into compulsory liquidation a creditor would have to petition the courts for your company to be wound up. This is done through a winding up petition. A copy of the winding up petition will be sent to the address of your registered office, and 7 days later the creditor will be able to advertise the upcoming petition hearing within the Belfast Gazette. If you fail to take action before the petition is advertised then it is highly likely that your company's bank accounts will be frozen and the court will grant the winding up order which will lead to your company being forcibly liquidated.

Therefore, if you're trying to avoid compulsory liquidation it is imperative that you seek professional guidance and take the appropriate action without hesitation. Before the winding up order is granted you may still be able to facilitate a rescue by negotiating a company voluntary arrangement (CVA) for your Northern Ireland based company or by entering into a last-minute company administration procedure. Read more on administration in Northern Ireland.

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Overview of Voluntary Liquidation in Northern Ireland

If you're interested in putting an end to your business voluntarily then there are two types of liquidation that can be used in Northern Ireland to achieve this:

Creditors' Voluntary Liquidation (CVL)

If your company is insolvent - meaning it is not in a position to fully repay creditors what is owed - then entering into a CVL may be the most appropriate step for all concerned.

To begin the process, the directors of your company would have to pass a resolution to wind up voluntarily and nominate an insolvency practitioner as liquidator. The appointed liquidator would then hold a creditor's meeting to discuss the particulars of the ensuing liquidation sale and subsequent distribution of funds, after which the process would proceed in the same manner as a compulsory liquidation.

It is important to note that at the creditors' meeting your creditors may decide to appoint their own liquidator, and this appointment could override your original nomination.

Members' Voluntary Liquidation (MVL)

A company in Northern Ireland can only enter into a Members' Voluntary Liquidation (MVL) if it is legally solvent and able to repay all outstanding creditors in full.

To initiate an MVL the directors of the company would have to make a sworn declaration of solvency – a formal document which states that the directors have investigated the affairs and finances of the business and have determined that it will be able to repay all of its debts within a period of no more than 12 months.

The declaration of solvency must be filed with the Companies Registry at least 5 weeks before making a resolution for voluntary winding up, and it must include an accurate statement of your company's assets and liabilities. Keep in mind that submitting a false declaration of solvency is a criminal offence.

If it is later found that your company is insolvent after an MVL has begun then a meeting of creditors and shareholders will be held and the liquidation will continue as a CVL instead.

If you are considering company liquidation for your company in Northern Ireland, contact the experts at Real Business Rescue for immediate help and advice. You can also schedule a free consultation with a licensed insolvency practitioner who will be able to help you understand your current position and explain the options open to you and your company.