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Cease trading: The options for closing down a limited company

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Updated: 5th February 2020

What is the easiest way for a limited company to cease trading?

If you are looking for an easy way to cease trading a limited company, the answer may be more complex than the actual procedure. Believe it or not, it is actually easier to form a limited company than it is to wind one up. The reason for this is because there are rules and regulations in place that will determine how it is that you go about winding up a company that is solvent and other procedures for winding up an insolvent business. In short, the easiest way to cease trading a limited company is to get help and advice from a licensed Insolvency Practitioner who can help you determine which method is best under your particular circumstances.

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Making a Voluntary Decision to Cease Trading

If your company is experiencing financial distress and there is not a realistic chance of things improving, you may come to the decision to cease trading and wind the company up voluntarily. Generally this process is accomplished through what is called Creditors' Voluntary Liquidation and a licensed insolvency practitioner (IP) would be appointed to oversee the liquidation process and report back to the court, creditors and shareholders. If the company is solvent, there are various ways in which to cease trading from simple striking-off (dissolution) to a Members' Voluntary Liquidation.

What Happens When a Company Ceases Trading?

When a limited company ceases trading, all business is called to a halt. The company can then either be registered as dormant or, if it is unlikely to be required again in the future, its directors can wind Creditors are paid, employees let go and the company removed from the register held at Companies House. At this point it ceases to exist as a legal entity. Any assets are sold and the proceeds will be distributed accordingly. In the event of a solvent company being liquidated its assets will be distributed among shareholders according to their percentage shareholding. When an insolvent company is liquidated, however, any company assets will be distributed between its outstanding creditors according to a designated hierarchy.

If you have made the decision to ceasing trading, whether your company is solvent or insolvent, seeking the help and advice of a licensed insolvency practitioner is strongly advised. Taking specialist advice means you will be taking the correct steps to close down your company in the correct manner and also ensure any outstanding creditors are treated fairly.

At Real Business Rescue we have an expert team on hand to help make the entire process as stress-free as possible. We offer a free, no-obligation consultation to help you gain a better understanding of your options. Call today on 0800 644 6080 to arrange a meeting with an insolvency practitioner in your area.

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