What are the benefits of liquidating a business?
Liquidating a business can be a solution for both solvent and insolvent companies.
Business Liquidation
Business liquidation is the professional and legal process of closing down a limited company. All company assets will be sold, and in the case of an insolvent business liquidation, the funds raised will be used to pay off creditor debts as far as possible. For a solvent business, the funds will be fairly distributed among the company shareholders.
If your company is solvent and you no longer need it, solvent business liquidation offers a structured way to close things down. Once your company has been liquidated with an MVL, you can move on to your next steps, whether that’s retirement, moving abroad, or just a career change.
Insolvent business liquidation halts creditor pressure and most pending legal actions against your company. You’ll benefit from knowing that your company affairs will be wrapped up in a legal and structured way, reducing risks to both you and your creditors.
Types of business liquidation
There are two main types of business liquidation, solvent and insolvent.
If your company is financially healthy and you and the majority of company shareholders wish to close it down, Members’ Voluntary Liquidation (MVL) may be the best choice. Whether you’re retiring or the company is no longer needed, an MVL is a cost-effective and tax-efficient way to liquidate a business.
If your company is struggling financially and under pressure from creditors, a Creditors’ Voluntary Liquidation (CVL) may be the most appropriate route. A CVL is a voluntary decision by the majority of company shareholders. It ensures that creditors are treated fairly, halts most pending legal actions against your company, and reduces risks to both you and your creditors.
Check out our report: Statistics on Business Failure for the latest stats, facts, and trends relating to business liquidations in the UK and how these figures have evolved over time.
Ready to talk to an expert about liquidating your business?
If you’re thinking about liquidating your business, contact the Liquidation Centre today on 0203 800 0626 We’ll guide you through every step and make sure you understand your options.
How do I liquidate my business?
To liquidate a business, you need to work with a licensed Insolvency Practitioner. Whether you’re going through a solvent or insolvent business liquidation, an Insolvency Practitioner is required to carry out the process. Company directors cannot handle the liquidation themselves.
An Insolvency Practitioner will advise on the right approach for your situation and ensure that all assets are fairly valued. The Practitioner will then use the proceeds to settle debts as far as possible, inform Companies House, and manage the legal dissolution of the company.
Who pays for liquidating a business?
The fees for liquidating a business need to be paid by the company. If that’s not possible, then you or anyone else can pay. As the process can’t begin without an Insolvency Practitioner, their fees will need to be covered.
If you’re liquidating an insolvent business, usually a pre-liquidation fee will need to be paid before the process starts. If your company doesn’t have enough assets to cover the fees, you or the other directors might need to pay personally.
Where can I get business liquidation advice?
If you’re looking for advice on business liquidation, the Liquidation Centre is here to help. Our team of experienced Insolvency Professionals will take you through every step, making sure you know what’s happening and why.
Get in touch with us today for honest, professional advice on liquidating your business.