Updated: 13th November 2020
If you are worried that your company may be insolvent then you should seek advice and assistance in finding an appropriate solution immediately. Watch the video below for an overview of what insolvency means and might mean for your business.
Insolvency can be defined in two ways; your company is insolvent if its liabilities exceed its assets, or if it is unable to pay its debts as and when they are due.
Numerous companies trading in the UK at present may find themselves in an insolvent position but many may still be viable businesses that are suffering from short-term cash-flow problems. However it’s time to take action if you feel that your company cannot continue trading without worsening the position of its creditors.
If you’re looking to place an insolvent company into liquidation, this process is called Creditors’ Voluntary Liquidation – known as a CVL. This solution is appropriate when there is no other option than the company ceasing to trade and being wound-up. In a CVL, assets are realised and sold with a view to paying a dividend to creditors where possible.
If you’re looking to place a solvent company into liquidation, the process is called Members’ Voluntary Liquidation – known as an MVL. This enables directors and shareholders to close down a solvent company and for any remaining assets – after creditors have been paid in full – to be distributed to its shareholders in a tax-efficient manner.
If you need to know more about voluntary liquidation and how to begin the process, you can arrange a free consultation with one of our insolvency specialists. We have an extensive network of 93 offices offering confidential director support across the UK.