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Quick Company Liquidation – How to liquidate your business fast

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Quick Company Liquidation – How to liquidate your business fast

Reviewed: 25th August 2017

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.

Online liquidation quickly initiated by directors

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.  

Timeline for a fast liquidation

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:

  • Directors meet to discuss a resolution to voluntarily liquidate the company, and a licensed insolvency practitioner (IP) is appointed to carry out the process. The IP informs creditors of the intention to liquidate the company, providing seven days’ notice.
  • A shareholders’ meeting is held during which the resolution to wind-up the company is passed if 75% (by value of shareholding) or more of members vote in favour.
  • Under the new insolvency rules, creditors may take part in a ‘virtual’ meeting to vote on the resolution. Alternatively, a process called ‘deemed consent’ may be used. This allows the liquidator to assume that, unless 10% (by value) of creditors object, the resolution is deemed to have been passed.
  • The IP prepares a Statement of Affairs with the assistance of directors. This describes events leading up to the insolvency, and what has caused the company’s financial collapse.
  • Within 14 days, the resolution must be advertised in the Gazette
  • It must also be sent to Companies House within 15 days.

 

What happens to you as a director?

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:

  • Providing information about the company
  • Answering any questions from the liquidator
  • Handing over the company’s financial paperwork, including details of assets and liabilities, bank statements and company accounts
  • Complying with the liquidator’s requests for interview

 

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.

What are the benefits of a quick liquidation process?

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 55 offices across the UK with a partner-led service offering immediate director advice.


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