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What Is Liquidation?

Liquidation guides a business to closure while realising its assets to creditors and shareholders. It is an event when a company is insolvent; therefore, it cannot pay its debts when they fall due. As company ceases, assets sold, the Liquidator pays creditors and shareholders, subject, however, to the priority of their claims. 

Licensed Insolvency Practitioners act as the appointed Liquidator.

Advice, therefore, is vital to protect creditors interests during attempts for business rescue.

Can I Liquidate My Limited Company Myself


Any Insolvency process requires the appointment of a UK Licensed Insolvency Practitioner.

To merely strike an insolvent company off is illegal.

For further help and support. Please contact HBG Advisory on 0800 612 5448 or arrange a safe, confidential VIRTUAL meeting online from the privacy of your home during the Coronavirus Pandemic.

Liquidate my business. – Meaning

The process in the UK to close a Limited company down. Many countries adopt a similar method as the UK including, Australia, New Zealand, Republic of Ireland, United States, Cyprus and Italy.

The sale of company assets, therefore, allows the Liquidator to pay creditors from liquidation proceeds. Liquidation also refers to a compulsory situation as winding-up of the company. Winding-up the affairs though, can be a voluntary reference as with a creditors voluntary liquidation.

The process then may also describe a company wishing to strip out some of its assets.

Conclusion of a company liquidation means directors, however, therefore, must cease using the business name of the former company. HMRC Time To Pay agreements to stop and subject to the Liquidator’s report.

With an Insolvent liquidation, however, all company debt stop, and the company ceases to exist. Meanwhile, with a solvent liquidation,(MVL); however, the company pays all the company debt and closes.

What does Voluntary Liquidation Mean?

Voluntary action by directors not enforced through court action as is a Compulsory Liquidation.

Voluntary liquidation for a liquidation means prompted when your limited company financially may longer function. Usually, your limited company has severe creditor pressure chasing invoices or other debt outstanding. Perhaps the company has a winding-up order and is days away from a compulsory liquidation? Directors, though, may conclude that their company is insolvent and no longer viable.

Therefore, opting for liquidation means you’re using the process to close the company legally by appointing professional licensed help while at all times protecting creditors of the company.

Once the Insolvency Practitioner (IP) is appointed, your director’s position ceases. You will though still be required to help, the liquidator throughout the liquidation process.

What does it cost? – Who Pays?

Cost varies on the size of the company and the issues. Assuming the company is Insolvent an a Creditors Voluntary Liquidation is, therefore, the process chosen. The cost is then recovered by time working on the case. Time is a significant cost factor. Therefore small limited companies with few assets, closure costs vary from £3,000-£6,000 plus VAT. That includes the appointment of an insolvency practitioner to assume office as Liquidator, creditors’ meeting and statement of affairs together with section 100 reports.

Additionally, statutory costs are then incurred:

  • Appraising and selling the assets with third-party RICS valuers;
  • Collecting outstanding monies due to the company pre liquidation;
  • Notifying directors of their duties;
  • Redundancies and employees’ claims;
  • Resolving disputes and any outstanding contracts;
  • Apprising HMRC, Companies House and the Insolvency Service regarding company position;
  • Examining transactions leading up to the closure of the company;
  • Appraising and selling the assets with third-party RICS valuers.

Cost to liquidate a solvent company

To liquidate a limited solvent company, however, depends really on time costs and the number of issues. For further guidance view Members Voluntary Liquidation (MVL).

How do I Liquidate My Company?

Liquidation – Liquidate your Limited Company

Liquidating a limited company is an insolvency process used to close a UK registered company. Various processes exist. Supervised by a licensed insolvency practitioner referred to as the Liquidator.

During the process, the Liquidator appoints independent valuers and agents to sell company assets.

The Registered office changes to the Liquidators address.

Creditors complete a proof of debt form,  which the Liquidator proves the debt and ranks it in order of payment priority.

During the process, the Liquidator has the company struck off the registrar of companies. Therefore, the dissolution is the final remains of the liquidation.

Internal links to guide you:

  • Voluntary liquidation of a solvent company
  • Voluntary liquidation of an Insolvent Limited Company with Debts;
  • Can I liquidate My Own Limited Company;
  • Compulsory Liquidation.

Liquidation – Company after Liquidation

A company liquidated, has ceased trading, therefore, removed from companies house register and closed.

What Types? – Closure options?

  • Creditors Voluntary Liquidation ( CVL ) – CVL is a process to close an insolvent limited company.

The company then ceases to exist, upon liquidation. You, as a director along with shareholders though, may vote your choice of Liquidator.

  • Members Voluntary Liquidation. ( MVL ) – An MVL procedure closes down a solvent limited solvent company. You have the opportunity to appoint your choice of Liquidator.
  • Compulsory Liquidation. – This type of liquidation you do not have any control. A creditor may petition to wind your limited company up in court; the official receiver appointed.

How do I find the right Insolvency firm for my company?

HBG Advisory offers directors, direction and results, however,  protecting your privacy and remaining confidential.

Our highly experienced team deal with companies in financial distress. We, therefore, set out our plan with directors at the pre liquidation meeting. Consequently, you will then be aware of your situation and have no surprises down the line. We have many years of experience dealing with aggrieved creditors and the HMRC.

For further help and you want to speak to someone about:

  • Cost
  • Time
  • Types

What are the Possible Outcomes for Directors?

Company directors need to ensure not to trade while insolvent. If so, and the company enters liquidation.

It may then impact on them personally. Insolvency Practitioners once appointed, have a duty to examine previous decisions by the directors before they are appointed liquidator.

Directors are required to ensure that they acted in the best interests of the creditors at all times. To maintain protection from liability, directors need to keep tight control of the companies finances and if in doubt, seek immediate professional help.

So understanding the role of the liquidator should help you avoid trading insolvently and not taking care of creditors over and above that of themselves. Failing which they may face charges of fraudulent or wrongful trading. If proven, then you fall exposed to personal liability of company debts.

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For help on redundancy while a director view REDUNDANCY.

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