How to prepare a company for liquidation

How can a director prepare to liquidate a company?

If you wish to liquidate a company, there are steps that you can take to prepare your company for the liquidation process. How you do this will depend on the type of company liquidation procedure you seek - insolvent liquidation or solvent liquidation.

If your business is insolvent, you must be vigilant in your approach to protect creditor interests. Avoid any actions that could worsen the financial position of creditors or be classed as wrongful trading.

Some of the ways a company director can prepare to liquidate a company include to:

Seek votes to liquidate – If you wish to liquidate a limited company, call a shareholder vote. If all company shareholders agree to liquidate the company from the get-go, this can prevent director disputes down the line.

Choose an insolvency practitioner – Company liquidation is a formal process initiated by a licensed insolvency practitioner. Research reputable insolvency practitioners that are licensed, reputable, and experienced. Read more about what to look for when choosing an insolvency practitioner, their duties, and how to appoint an insolvent practitioner.

Bring company affairs to a close – When preparing to liquidate a company, bring company affairs to a close and tie up any loose ends. This will vary between an insolvent or solvent business as if your business is insolvent, you will need to be more sensitive due to the financial impact on creditors.

Consider financial, legal and compliance duties, such as ending agreements, collecting overdue invoices and bringing accounts up to date.

Identify creditors and company assets as this information is integral for the licensed insolvency practitioner and can help ensure an efficient liquidation process.

Fulfil accounting duties – Bring your accounting reports up to date and take note of your final filing responsibilities to HMRC and Companies House. Work alongside your accountant to ensure that they have all the information required to produce cessation accounts. Up-to-date accounting records are required to help structure a tax-efficient exit.

While an insolvency practitioner will provide step-by-step guidance throughout the company liquidation process, preparing the company for liquidation can avoid unnecessary delays and speed up the liquidation process, which can drive down costs.

“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

Director considerations when preparing to liquidate a limited company

When liquidating a limited company, it’s crucial to understand your responsibilities as a company director. You must act responsibly and refrain from actions that could damage the financial position of creditors. If a company is insolvent, cease trading immediately and seek urgent insolvency guidance. If you continue trading while insolvent, you could be held personally liable for company debts.

If you suspect your business may be insolvent, an insolvency practitioner should be your first port of call.

Get a Quote Find Your Nearest Office

How can Real Business Rescue help company directors prepare for company liquidation?

To understand which company closure route is right for you and how you can prepare for the company liquidation process, speak with a licensed insolvency practitioner at the earliest opportunity. Preparing your company for the liquidation process can help streamline the company closure process.

For a free, confidential consultation, get in touch with a licensed insolvency practitioner at Real Business Rescue. We have over 100 offices across the UK and a dedicated helpline for distressed company directors, so trusted advice is always on hand.