Winding up a company that is unable to pay its debts involves the appointment of a licensed insolvency practitioner (IP). The process is called a Creditors’ Voluntary Liquidation, or CVL, and if you decide to take this route the liquidator will control the business on appointment.
Closing a limited company in this way prioritises the interests of creditors, which is a major factor in any insolvent situation. The liquidator will identify all the company’s assets and liabilities, value and sell the assets, and distribute the proceeds to creditors in the statutory order prior to closing the company down.
The liquidation fee will vary according to the size of the company, and the amount of work involved. Costs can range from around £4,000-£5,000 plus VAT for small limited companies with minimal assets.
This figure can be considerably higher for larger companies owning a number of assets, due to the additional complexity and time needed to wind up the company. So with this in mind, what are a liquidator’s duties during the process?
When a liquidator takes over control of an insolvent company they must value and sell any assets, and distribute funds among creditor groups in the prescribed order. The office-holder also undertakes investigations into the directors’ conduct during the time leading up to insolvency.
Some directors choose to fund a CVL process using their own personal funds, either in full or in part. Selling your own assets could boost the money available to pay liquidator fees, and if other directors take the same action, you may be able to cover all the costs.
Other directors choose to use personal savings to pay for their company’s liquidation, and some opt for a personal loan that they can pay off over time.
Begbies Traynor can offer professional advice and assistance if your company is considering voluntary insolvent liquidation. We will provide impartial advice on the best options bearing in mind your statutory duties as a director. Call one of the team to arrange a free same-day consultation to discuss your needs – we operate from 75 offices nationwide.