What is a No Asset Liquidation?

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Updated: 9th September 2021

When a company is insolvent and there is little chance of effecting a rescue or turnaround, placing the company into liquidation may be the only available option. This is most commonly done by way of a voluntary process known as a Creditors’ Voluntary Liquidation – or CVL.

As a director-initiated process, the costs associated with placing an insolvent company into a CVL must be paid by the company. As part of the liquidation process, all assets belonging to the insolvent company will be sold – or liquidated – with the proceeds then distributed amongst outstanding creditors. The liquidation fees due are also typically taken from the realisation of company assets.

What happens when a company does not have any assets?

When a company does not have sufficient assets – such as property, machinery, stock, or cash at bank – with which to cover the liquidation fees, this creates a situation known as a no asset liquidation. Even though the company may not have the required funds to hand, unfortunately, the liquidation fees still need to be paid if the company is to enter into liquidation on a voluntary basis.

If the company is not able to cover these, then responsibility will pass to the directors/ shareholders of the business themselves. In the event on a no asset liquidation, this often involves directors having to use personal funds to meet the cost of the CVL.

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What if I cannot afford to liquidate my company?

With a formal CVL process costing several thousand pounds, many directors of insolvent companies simply do not have this amount of money available at a time when personal funds are likely to suffer as a result of ongoing issues with the business.

If a director does not have the personal funds or company assets with which to place their insolvent company into liquidation voluntarily, it may be the case that a creditor takes steps to forcibly have the company liquidated instead. This is done through the issuing of a Winding Up Petition (WUP) which, if the insolvent company does not adequately challenge or else settle the amount being asked for, the courts will order that the company is wound up in a compulsory liquidation process. It should be noted that filing a WUP is an expensive step for a creditor to take and is typically the cumulation of a lengthy process to extract payment from the insolvent company.

Professional liquidation help and advice

If you know your company to be insolvent, it is strongly advised that you seek professional advice from a licensed insolvency practitioner rather than wait for a creditor to wind up your business. As the director of an insolvent company, you have a number of legal obligations and a duty of care towards your creditors. You must refrain for engaging in any activity of behaviour which may worsen the position of your creditors. For some, this may necessitate that the company ceases trading immediately, while other insolvent companies may be permitted to continue operating if it is deemed that this will improve creditor returns. By seeking expert advice at the earliest signs of insolvency, you can ensure that you adhere to your duties during this time.

If you are considering a no asset liquidation for your company, speak to the experts at Real Business Rescue who will be able to talk you through your options and suggest ways of how the liquidation may be able to be funded if there are insufficient assets in the company.

Liquidation and director redundancy

It is not widely known that directors of limited companies may have a legitimate claim for redundancy should their company become insolvent and subsequently enter a formal liquidation process. This is because directors who perform a day to day role in the operations of the business, as well as taking a regular salary through PAYE, are also classed as employees of the business.

Redundancy for directors works in much of the same way as redundancy for employees. This means that directors must meet a set criterion in order to qualify, and the amount directors may be entitled to claim will depend on a combination of factors including age, length of service, and the salary taken from the business.

Money received by way of a director redundancy claim can be used in any way the individual sees fit whether this is to fund a new business venture, or else provide some financial security during an undoubtedly stressful time.

How Real Business Rescue can help

For more information on no asset liquidations, and whether this could be a suitable option for your company, call our expert team today on 0800 644 6080. We offer free no-obligation consultations to directors of distressed companies, and with over 100 offices across the country, you are never far away from the help and support you need.

Keith Tully


0800 644 6080
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