There are different types of liquidation, please read below to determine which is best for your company, alternatively contact us for a no obligation free initial review which is completely confidential:-
Find out more information about what is liquidation.
A CVL is where the directors take it upon themselves to place the company into liquidation as opposed to the creditors issuing a winding up petition to Court in order to compulsorily liquidate the company.
The process of placing the company into liquidation is fairly straightforward (although the process should not be taken lightly). As a director you will meet an Insolvency Practitioner who will undertake a full fact find of the company. Once the fact find has been completed then a directors meeting is held for the purposes of calling two future meetings. The first meeting will be a members meeting, as it is the members (shareholders) who actually pass the resolution to place the company into liquidation. Without this resolution the company can not go into liquidation. The second meeting is the actual creditors meeting whereby any of the creditors are free to attend and ask questions of the director with regards to the running of the company. At this meeting the liquidator is formally appointed.
Once the liquidator is appointed he is able to sell all the assets and deal with all creditors and their associated claims.
A pre pack liquidation works in a similar way to a pre pack administration, however the company is in Creditors Voluntary Liquidation rather than Administration and the sale process completes once the liquidator is formally appointed by creditors.
The compulsory liquidation process is instigated by creditors who have issued a winding up petition and can request the court to make an order for the winding up of the company. Once the court order has been made then the company is in liquidation.
The Official Receiver who works for the government body of the Insolvency Service, which is a division of the Department for Business, Innovation & Skills (formerly the known as the DTI), initially is the receiver and manager of the company who conducts an investigation into the business and affairs of the company. This is unlike a creditors voluntary liquidation whereby the appointed liquidator will conduct any investigation into the business.
Upon the request of the creditors of the company, an independent liquidator can be appointed whose job will be either to preform a more in depth investigation into the company or to deal with the remaining assets of the company.
Members Voluntary Liquidation (MVL)
A Members Voluntary Liquidation is a solvent liquidation whereby all creditors are paid in full and there is a distribution to shareholders.
When the decision has been made to close down a company and all the assets have been sold, a formal winding up through a MVL is often a tax efficient way of distributing the funds as the tax payable will be capital tax gains tax rather than income tax.
If you wish to sell part of a company and retain another part then a MVL may be the most tax efficient way of splitting the company into two separate companies.
The directors of the company have to swear a declaration of solvency. Should the liquidation turn out to be an insolvent one rather than a solvent one, the liquidation has to be converted to a CVL and reported to the Director of Public Prosecutions which could result in criminal proceedings being issued against the directors.
Should you wish to discuss liquidating your company, live chat to us now (if we are online) or contact us.