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Published: 14th January 2020
If your company is going into liquidation, the process will involve realising all business assets and holdings in order to repay creditors. There are two types of liquidation – voluntary and compulsory, and we look at both in more detail below.
You might have opted for voluntary liquidation in a range of circumstances. During times of financial distress liquidation is often an option when creditor pressure has become too much to deal with. In the case of a solvent company, liquidation may be sought if want to retire, or close the business for any other reason.
Whatever the reason, the closure of your business through a voluntary liquidation procedure will need to be administered by a licensed Insolvency Practitioner.
Two voluntary liquidation options are available – Creditors’ Voluntary Liquidation (CVL) and Members’ Voluntary Liquidation (MVL).
A good option when:
A short breakdown of the process:
Are there any disadvantages for you as a director?
A good option when:
A short breakdown of the process:
Are there any disadvantages?
If your company is facing compulsory liquidation, it means that one of your creditors has taken legal action against you. It could be that they have issued a Statutory Demand for Payment for a debt of £750 or more, which has remained unpaid.
Once a winding-up order has been issued by the court, your company will close down and all assets liquidated to provide payment to as many creditors as possible. One of the few advantages of compulsory liquidation is that the creditor making the petition pays for the process.
Cessation of other creditor pressures may also come as a relief if you have been on the verge of insolvency for some time. During this liquidation process, you are, however, obliged to comply with the requests of the liquidator in terms of providing all information requested.
Insolvency Service investigations into director conduct
Failure or reluctance to provide the requested information may have serious consequences. All director conduct is investigated during a liquidation procedure (whether voluntary or compulsory), and a report sent to the Secretary of State at the end of the process.
This forms the basis of a decision as to whether further investigations are necessary. In reality, this could lead to accusations of wrongful trading or unfit conduct as a director, and affect your eligibility for directorship in the future. In serious cases, directors may face a prison sentence.
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Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...