Liquidation

What is Liquidation?

Liquidation is a structured, professional and formal way to close down your limited company. If your company is in financial distress, it is used as a way to pay off creditors, or to release funds from a solvent company.

There are several ways to liquidate a company available. Whether your company is solvent or insolvent will dictate which liquidation process is right for you.

Once the liquidation process is complete your limited company will be officially dissolved, struck off from the register at Companies House.

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If you feel your company may be in financial distress, don’t delay we are here to help guide you through your options.

What are the types of company liquidation?

MVL

An MVL or Members’ Voluntary Liquidation is used to liquidate a solvent company. If your company is financially healthy and you wish to close it down due to a change in circumstances such as retirement, return to employment or the company is no longer needed then an MVL is a cost-effective option.

There are substantial tax benefits to an MVL in the form of Business Asset Disposal Relief. If you qualify for this generous tax benefit you will only pay a fixed 10% tax on all distributions you receive from the company assets

Do you want to take advantage of the tax benefits provided through an MVL? Contact one of our in-house liquidation experts today.

CVL

If your company is insolvent, a Creditors Voluntary Liquidation or CVL is a controlled and formal liquidation option if recovery is not possible.

During a CVL, the appointed Insolvency Practitioner will conduct relevant investigations into your conduct and running of the company, value and realise all company assets and distribute the liquidated funds across your company’s creditors.

A CVL can seem like a daunting process. Still, an experienced Insolvency Practitioner will be able to explain the process and your required duties to you and ensure the process runs as smoothly and simply as possible.

Compulsory liquidation

There are instances where your company may face compulsory liquidation. This type of liquidation is not voluntary by company directors as it is ordered by a court. A compulsory liquidation will ordinarily follow a statutory demand from a creditor that results in a winding-up petition being issued which forces your company into liquidation.

A winding-up petition takes control out of your hands and results in the freezing of all your company bank accounts to protect assets from being sold or removed. There will be a full investigation by an Official Receiver, appointed by the court, into your conduct and why your company failed.

Need to speak to a liquidation expert today? A company in financial distress can quickly become unmanageable, don’t delay getting expert advice. We are here to help you understand your next steps. Contact us today.

What are the advantages of liquidation?

✓Follow expert guidance and protect yourself

By voluntarily liquidating your company you can help to protect yourself from trading risks. By knowingly trading through an insolvent company, you put yourself in danger of being accused of wrongful trading. This can result in you being made personally liable to contribute to some or all of your company’s debts. By instructing an Insolvency Practitioner, you can reduce this risk by acting under their guidance and advice and by understanding your duties as a director of an insolvent company. This will help reduce losses to your company’s creditors and mitigate your risk of personal liability.

✓ Eliminate creditor pressure and court action

If you are liquidating the company due to financial distress it is likely that you have been under pressure for payments from your company’s creditors and in some cases are being threatened with court action. By liquidating your company formally you can put a halt to these demands.

✓Take control of your future

By liquidating your solvent company, you can professionally close down your company and release any leftover funds for your next steps in life. Whether you wish to retire, move abroad or go back into employment choosing to liquidate allows you to take control of your future.

How much does liquidation cost?

There is no fixed liquidation cost as the overall cost of liquidating depends on your current financial situation, the size of your company, the amount of work involved in the liquidation and the value and number of assets. However, the approximate cost to start an MVL is £XXXX

Where can I get liquidation advice?

If you wish to liquidate your limited company, you will need to seek liquidation advice from a licenced Insolvency Practitioner (IP). Whether your company is solvent or insolvent, deciding to close down your company is a big decision and requires expert guidance.

Taking liquidation advice from an experienced liquidation expert will allow you to understand your options and which steps you need to take to help protect your business, yourself and your creditors.

At The Liquidation Centre we offer a free no-obligation financial health check to help you understand your company’s current position and what liquidation options are open to you.

Enquire about your free financial health check today.

Ready to speak to one of our in-house liquidation experts? Contact us now.

Do I need an Insolvency Practitioner to liquidate?

Voluntary liquidation is the formal closure of your company and must be conducted by a licensed Insolvency Practitioner. Once appointed, your IP will take control of the liquidation process.

They will be responsible for various duties including the value and realisation of company assets, communicating with your creditors and notifying necessary bodies of the liquidation.

If you are liquidating through a CVL all recovered funds after costs will be distributed fairly across your creditors by your IP. If you have liquidated through an MVL then funds after settling costs will be distributed between you and other sharholders.