Updated: 26th February 2020
If you’re looking to liquidate your company quickly due to creditor pressure, or because your business is no longer viable, from April 2017 new legislation allows you to liquidate faster than was previously possible.
The new arrangements let you expedite what was often a slow and somewhat cumbersome process. Under the Small Business, Enterprise and Employment Act (SBEE) 2015, you no longer need to hold in-person creditor meetings during a Creditors’ Voluntary Liquidation (CVL) process, unless 10% of creditors (by value or in total number), or 10 individual creditors, request it.
As a company director you can now quickly initiate liquidation proceedings online, benefitting from a new and streamlined process incorporating modernised communication methods.
Email, electronic voting, and virtual meetings replace the in-person meetings that slowed down this process. They are now standard methods of contact between the office-holder and creditors, via which decisions can be made. Creditors may also be able to download documents and information from a designated website.
So if you’re wondering how quickly you can liquidate a business since the new rules were introduced, assuming that no physical meetings are necessary, seven days is the timescale involved.
Although some liquidation processes may continue to be slow due to creditor requests for ‘old-style’ meetings, in general, the following timeline is now possible. This explains the process using the updated practices:
When the company goes into liquidation, your powers as a director cease and become vested in the office-holder. You will be required to assist the liquidator whenever possible. This includes:
Part of the liquidator’s role is to establish whether director misconduct has been a factor in the insolvency. Examples of this could include continuing to trade even though you were aware the company was unable to pay its bills, or making a preferential payment to one of your creditors in favour of others.
When your business is failing and you’re worried that creditors might take legal action against you, a fast liquidation can protect you from allegations of misconduct.
Regardless of whether or not the process is voluntary, a liquidator is obliged to undertake investigations into your conduct, and quickly entering this process demonstrates that you’ve placed your creditors’ interests first – an important consideration that conveys a responsible approach.
Being able to commence a voluntary liquidation procedure quickly also helps you deal with this worrying situation, and alleviate some of the stresses. But other parties also benefit from a fast liquidation.
The liquidator’s costs are paid first in this procedure, and it’s often the case that unsecured creditors receive no return from the process. Because these costs are reduced using the new streamlined methods and processes that facilitate liquidation quickly, unsecured creditors stand a greater chance of receiving a return.
For more detailed information on how to liquidate your company quickly, call our experts at Real Business Rescue. We are licensed insolvency practitioners with extensive experience, and offer a free same-day meeting to discuss your needs. Our extensive office network comprises 86 offices across the UK with a partner-led service offering immediate director advice and support.
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