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How to Start Liquidating My Company

Affected by Covid-19? Immediate Rescue Or Closure Options Available

*Important* - Remember to Ask About Directors' Redundancy When Enquiring About Liquidation Options - Average Claim is £9,000

Updated: 29th January 2020

How to Start the Liquidation of a Company & Things to Consider

When your business is no longer profitable and there seems to be no prospect of escaping insolvency, a straightforward way to end the company is to liquidate all assets. Beginning the liquidation process is very easy, but there are certain steps that need to be taken to protect the company's directors. There are two types of liquidation that apply to insolvent companies – Compulsory (in which one of the company’s creditors forces the business into liquidation by way of a winding up order) and Creditors' Voluntary (in which the company directors voluntarily start the liquidation). The easiest way to liquidate your own company is to undergo a Creditors’ Voluntary Liquidation.

Starting a Creditors' Voluntary Liquidation (CVL)

The first step in starting a CVL is approaching an insolvency practitioner to facilitate the process. If the company is already trading insolvent the Insolvency practitioner will have to hold a creditors’ meeting, during which a liquidator will be appointed. In most cases the creditors will appoint the liquidator recommended by the company's directors (i.e. – the insolvency practitioner). However, if a bank is one of the company’s major creditors they may choose to appoint a liquidator from their own approved panel. Once you’ve made the decision to liquidate your business and the creditors' meeting has been held, the rest will be handled by the appointed liquidators and no further input will be needed from the company's directors. The liquidator will sell the company’s assets (if there are any) and will use whatever proceeds remain to repay creditors.

Why Not Wait to Be Wound Up By Creditors?

Initiating a Creditors’ Voluntary Liquidation typically costs several thousand pounds, so why not just wait until one of your creditors issues a winding up petition and forces the company into a Compulsory Liquidation instead? This is an option which many directors choose but it is highly likely that the whole process will take longer and be a far more stressful experience.

Keith Tully - Managing Director

Keith Tully

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I am Keith Tully and I am the Partner of Real Business Rescue, I have seen every possible company scenario and am happy to help you where I can.
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Initiating the liquidation voluntarily instead of waiting on your creditors will give you the peace of mind of knowing that everything is being taken care of.

Liquidation Alternatives

Unless you feel that your insolvent company has no hope of becoming solvent again, or the company has so few assets that continuing would not be worthwhile, there are two other options you might want to consider before committing to liquidation:

  • Pre-Pack Administration – all or some of your company’s assets are sold in order to recuperate the funds needed to repay debts. The business of the company can continue operating during and after the administration, and the assets can even be sold to the company’s directors (a process known as “phoenixing”). A pre-packaged sale of assets is the best way to continue business operations, preserving brand integrity, and retaining employees and contracts. Click here to learn more about pre-pack administrations.
  • Company Voluntary Arrangement (CVA) – an Insolvency Practitioner creates and proposes an arrangement to your creditors. If accepted the new arrangement will help alleviate some of your company’s debt because the arrangement will be restructured to allow for monthly payments spread out over a longer period of time. Even if you have been unable to get your creditors to agree with negotiations in the past, a professionally drafted CVA offers a much higher chance of success. 

Call us today to participate in a free consultation and we’ll help you determine whether liquidation is the most ideal course of action for your company. If you’ve already made your decision we can simplify and expedite any insolvency procedure you have in mind. We have an extensive network of 78 offices offering confidential director support across the UK.

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