
Understand your company's position and learn more about the options available
Require Immediate Support? Free Director Helpline: 0800 644 6080
Free Director Helpline: 0800 644 6080
Updated:
Liquidation is an formal process used to close down both solvent and insolvent companies, however, there are some alternatives to liquidation which may be suitable for your company if you want to avoid this process.
When it comes to considering the alternative to liquidation, it must first be determined whether your company is solvent or insolvent. Several alternatives to company liquidation do exist for both solvent and insolvent companies, should it be decided that liquidation is not the most appropriate course of action.
If you are looking to close down a solvent company without liquidation, then strike off may be an option. If your company is insolvent, however, you may be able to avoid liquidation by placing the company into an alternative formal process which is designed to save the business by improving its finances and/or operations.
Free 60 Second Test
For Ltd Company Directors
What are you looking to do?
Choose below:
Company dissolution
Company dissolution, also known as company strike off, may be a good alternative to a solvent MVL process in some instances. This will typically be the case if the company has straightforward affairs and a relatively low level of assets (typically less than £25,000).
Before going down the strike off route, it’s extremely important to ensure that the company is actually solvent. As the process is only designed for solvent businesses, it can create problems if a creditor challenges the process due to them being owed money by the company.
As a director, you should also make sure that all assets are dealt with prior to closing the business, as any remaining under company ownership pass directly to the Crown under a process known as ‘bona vacantia.’
“Shaun really helped me for quick legal advice in a stressful situation where I needed advice QUICK. Called me back within 30 seconds and gave me the advice I needed. Thank you”
Sam
There are a number of alternatives to an insolvent liquidation process for those companies who have a viable chance of turning around their fortunes. If your business is experiencing financial challenges and you are concerned the company may be approaching - or perhaps already is - insolvent, liquidation is not necessarily the only option. A licensed insolvency practitioner will be able to talk you through your options which may include a Company Voluntary Arrangement (CVA), Company Administration, or a process of company restructuring.
A Company Voluntary Arrangement – or CVA – enables you to continue to trade even if the company is experiencing cash flow and other financial difficulties. This process may be appropriate for businesses in temporary financial trouble, but which are deemed viable in the long-term by a licensed insolvency practitioner (IP).
Negotiations are entered into between the indebted company and its creditors in order to reduce the immediate financial burden. Some debt may be written off as part of the process, with the remainder structured across a series of monthly repayments. Creditors can include HMRC if you have tax debts, as well as landlords should the company be tied into lengthy lease terms. The company must be able to fulfil its obligations under the CVA for the full term, which typically runs for 3-5 years, meaning the business must be able to demonstrate ongoing viability to creditors.
Under this legally binding agreement the company is protected from creditor legal action, with the aim being to trade its way out of difficulty over a period of time.
Looking to close your company?
Whether your company is solvent or insolvent, there are a number of ways to bring your business to a close. Speak to a member of the Real Business Rescue team today to understand your options.
The team are available now - 0800 644 6080
Get a Quote Find Your Nearest Office
Company administration is another rescue/restructure measure, and potential alternative to insolvent liquidation. Administration is particularly valuable for businesses experiencing unrelenting creditor pressure, as it provides an eight-week moratorium on creditor legal action.
The administration process offers several potential outcomes, the most appropriate of which depends on the administrator’s assessment of the company. The exit routes out of administration include:
Pre pack sale
Selling the business via a pre pack administration, whereby the sale is arranged prior to the formal appointment of the administrator, is one potential outcome of entering administration. Under this route, you and other directors may be able to purchase some or all of the company’s assets from the liquidator and set up a ‘newco’ without the debt. Clearly, this could become a contentious issue for creditors, but stringent legal safeguards are in place to protect them.
CVA
The CVA described above is also a potential exit route out of administration, and could be used to rescue the company if it’s eligible.
Restructure/reorganisation
The IP may decide that restructuring and streamlining the company’s affairs will provide it with the best chance of recovery. This could include selling non-essential assets, informally negotiating debt repayments with creditors, and/or closing non-performing arms of the company.
Liquidation
If it is decided during the administration process that rescuing your company isn’t possible, company liquidation may be the only route available.
Although company liquidation could ultimately become the recommended course of action for businesses in financial difficulty, the UK’s insolvency regime offers powerful and effective alternatives. If you would like more information on the alternatives to company liquidation, please get in touch with our expert team.
Real Business Rescue offers free, same-day consultations, and can establish the most appropriate course of action for your company. We operate a broad network of offices across the UK.
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
Complete the below to get in touch
For Ltd Company Directors
What are you looking to do?
Choose below:
We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.
Understand your company's position and learn more about the options available
Find your nearest office - we have more than 100 across the UK. Remote Video Meetings are also available.
Free, confidential, and trusted advice for company directors across the UK.