Company Liquidation

What is company liquidation?

Company liquidation is the formal and legal process by which a limited company is closed down. Depending on your financial situation, your business can undergo either solvent or insolvent liquidation, which can be voluntary or compulsory.

Liquidating a company can be a complex process regardless of the reason it needs to close. To ensure that you are acting in accordance with your responsibilities as a director and that you protect yourself and your creditors, you should always act under the guidance of a regulated liquidation expert.

The Liquidation Centre have over 20 years of experience in company liquidation advice. We are here to ensure you receive help and guidance on your options and to keep things simple and understandable.

If you are wondering, “How do I liquidate my company?” our team is here to explain the process to you.

Types of company liquidation UK

There are several ways to liquidate a company in the UK; the right option for your company will depend on its circumstances.

Whether your company is solvent or insolvent, we can complete a free, no-obligation financial health check to help clarify your situation and next steps. If you have any concerns that your company may be insolvent, it’s important that you get advice as soon as possible.

The Liquidation Centre have a team of fully licensed Insolvency Practitioners who can advise you on your situation and the available next steps.

Creditors’ Voluntary Liquidation (CVL).

Creditors’ Voluntary Liquidation (CVL) is a company liquidation option for a company that is insolvent or in financial distress. If you are unable to meet your financial obligations as they fall due and have more debts and liabilities than assets, your company is likely insolvent.

A CVL is the professional, organised and legal liquidation of an insolvent company. Starting the CVL process gives you access to the support and guidance of an Insolvency Practitioner (IP) who will carry out the process, which will alleviate creditor pressure and reduce the risks of pending legal action against your company.

During your company’s CVL, the IP will act as the liquidator, arrange for the valuation and realisation of your company assets, and distribute the proceeds fairly amongst your company’s creditors. This will ultimately result in your company being dissolved and removed from the register at Companies House. The cost to liquidate a company through a CVL will vary based on the circumstances and work involved in the liquidation.

To begin the CVL process a pre-appointment fee will need to be paid to the instructed Insolvency PractitionerDuring your company’s CVL the IP will act as the liquidator and will arrange for the valuation and realisation of your company assets and will distribute the proceeds amongst your company’s creditors fairly. This will ultimately result in your company being dissolved and removed from the register at Companies House. The cost to liquidate a company through a CVL will vary based on the circumstances and work involved in the liquidation. To begin the CVL process a pre-appointment fee will need to be paid to the instructed Insolvency Practitioner.

If you know or believe that your company may be insolvent it is important that you cease trading and seek professional company liquidation advice as soon as possible.

An Insolvency Practitioner will be able to advise you on your legal responsibilities as the director of an insolvent company. Failure to comply with legal requirements can result in heavy fines and even imprisonment if investigations reveal wrongful trading.

Members’ Voluntary Liquidation (MVL).

If you are the director of a solvent company and wish to liquidate, then a Members’ Voluntary Liquidation is a cost-effective and tax-friendly liquidation option.

MVLs are available to solvent companies that can pay their debts as they fall due and have more assets than liabilities. The desire to liquidate could be due to retirement or a return to employment. If the company is solvent, then an MVL is a sensible option.

If your company has been trading for more than 24 months and has over £25,000 in net assets, speak to one of our in-house liquidation experts about how you can release the funds tied up in the company and benefit from substantial tax benefits on liquidating your company assets.

Compulsory Liquidation.

The courts will order a compulsory liquidation when the creditor of an insolvent company petitions for a winding-up order. This happens when they believe your company is insolvent and has lost the ability to pay its debts.

The creditor in question is often HMRC, as the process is costly, although the option is available to any creditor who wishes to liquidate your insolvent company. Receiving a winding up petition from any creditor is a very serious situation as the company’s bank accounts will be frozen, making it almost impossible to continue to trade.

If your company is in financial distress, seek the help of an Insolvency Practitioner immediately.

Ready to start your company liquidation? Our team of liquidation experts are ready to guide you through your options and the process of a company going into liquidation. Call 0207 538 2222 or fill out our contact form today. We are here to keep liquidations simple.

How to liquidate a company.

To liquidate your company, you need to nominate a licensed Insolvency Practitioner to become the liquidator, as liquidations cannot proceed without one.

MVLS and CVLS, despite being voluntary liquidation options, still need to be processed by an Insolvency Practitioner as you cannot legally carry out the process yourself.

Company liquidation costs can vary depending on the company’s circumstances, the liquidation type, and the amount of work involved in carrying out the liquidation.