“My company is clearly failing and I don't think that it will be able to recover. I would like to liquidate the business and put it to an end but I don't have the money to pay an insolvency practitioner. Is it possible for me to liquidate the company myself?”
Technically the term liquidation simply means to sell the assets of a company and use the proceeds to repay its debts. Therefore liquidation itself is a practice that any business can carry out independently, especially if they're only trying to conduct a partial liquidation (selling some of the company's assets to repay debts with the goal of continuing the business).
However, there are also formal insolvency procedures that are referred to as liquidation – voluntary liquidation and compulsory liquidation – and these can only be carried out by a licensed insolvency practitioner. But why?
Because whether you initiate the liquidation of your company voluntarily or wait for creditors to send you into compulsory liquidation the outcome is the same – creditors will ultimately be in control of who is appointed as liquidator, and for this reason UK law dictates that only a licensed insolvency practitioner can be appointed as liquidator in any formal liquidation proceeding.
Be careful when taking advice you are actually speaking to a qualified insolvency practitioner and not a broker or middleman who may look to charge unnecessary upfront fees.
If you simply want to close down the company and you don't have any assets to liquidate you could dissolve the company and have it struck off the Companies House register, but this process would typically take about 3 to 6 months and you'll need to put together and present cessation accounts in order to do this.
It is especially important to be careful about your actions and accounting practices after you have become aware of the fact that the company is trading insolvent. If you attempt to sell off all assets in an independent liquidation and you sell the assets for a price that is far below market value you could be accused of wrongful trading. In addition, you don't want to take out any credits or loans while the company is insolvent, as you may be held personally liable for these debts if you are found guilty of wrongful or fraudulent trading.
If you're concerned about the costs of liquidating a company and feel as though you won't be able to afford it please do give us a call on 0800 644 6080 or email us and we may be able to work out a deal with you to solve your business insolvency issue as efficiently as possible.