If you're the owner or director of an Irish company that is on the verge of being taken to Court by its creditors, or if you're interested in going out of business voluntary, then the following guide on company liquidation in Northern Ireland may prove to be helpful. If you've been served winding-up petition, you can read more specifically on winding-up orders in Northern Ireland.
If you're not interested in reading a detailed guide and you'd rather receive personalised advice, feel free to send us your questions or call us on 0800 644 6080 for a free consultation. With 75 offices stretching from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK.
There are two main ways a company can be liquidated in Northern Ireland – a creditor can force it into compulsory liquidation under certain circumstances, or the directors of the business can opt to initiate voluntary liquidation. Below we provide a detailed overview of both:
When your creditors are threatening to put you out of business, or if you've already been issued a winding up petition, then this is the type of liquidation your company is facing. A compulsory liquidation can be initiated by one or more creditors if the company has defaulted on a debt of more than £750 and has failed to comply with formal payment demands in a manner that is satisfactory to the petitioning creditor. The Department of Enterprise, Trade, and Investment (DETI) can also petition to have your company wound up.
To begin the process of putting your company into compulsory liquidation a creditor would have to instruct a solicitor to send a winding up petition to the Court. A copy of the petition will be sent to the address of your registered office, and 7 days later the creditor will be able to advertise the upcoming petition hearing within the Belfast Gazette. If you fail to take action before the petition is advertised then it is highly likely that your company's bank accounts will be frozen and the Court will grant the winding up order.
Therefore, if you're trying to avoid compulsory liquidation it is imperative that you seek professional guidance and take the appropriate action without hesitation. Before the winding up order is granted you may still be able to facilitate a rescue by negotiating a company voluntary arrangement (CVA) for your Ireland based company or by entering into a last-minute company administration procedure. Read more on administration in Northern Ireland.
If you're interested in putting an end to the business voluntarily then there are two types of liquidation that can be used in Northern Ireland:
If your company is insolvent (its assets are not valuable enough to fully repay creditors) then entering into a CVL is the appropriate way to carry out a voluntary liquidation.
To begin the process, the directors of your company would have to pass a resolution to wind up voluntarily and nominate an insolvency practitioner as liquidator. The appointed liquidator would then hold a creditor's meeting to discuss the particulars of the ensuing liquidation sale and subsequent distribution of funds, after which the process would proceed in the same manner as a compulsory liquidation.
It is important to note that at the creditors' meeting your creditors may decide to appoint their own liquidator, and this appointment could override your original nomination.
A Northern Irish company can only enter into an MVL if it is legally solvent (having assets that are valuable enough full repay all creditors if sold).
To initiate an MVL the directors of your company would have to make a sworn declaration of solvency – a formal document which states that the directors have investigated the affairs and finances of the business and have determined that it will be able to repay all of its debts within a period of no more than 12 months.
The declaration of solvency must be filed with the Companies Registry at least 5 weeks before making a resolution for voluntary winding up, and it must include an accurate statement of your company's assets and liabilities. Keep in mind that submitting a false declaration of solvency is a criminal offence.
If it is later found that your company is insolvent after an MVL has begun then a meeting of creditors and shareholders will be held and the liquidation will continue as a CVL instead.
If you're not interested in selling all of the company's assets but you believe that some of the assets could be realised into cash that could be used to repay debts then a partial liquidation (also referred to as asset liquidation) may provide a suitable solution. If there is no threat of being taken to Court in the near future then you could facilitate the sale of assets independently. However, if creditors are already threatening aggressive legal action then the wisest move may be to appoint an insolvency practitioner as administrator so that we can help you sell non-essential assets under the protection of an administration order.
If you have any curiosities about company liquidation or other matters related to corporate insolvency in Northern Ireland, feel free to send us your questions or call us on 0800 644 6080 for free advice. You can also schedule a free consultation at one of our 40 regional offices including Belfast.