How Do I Liquidate My Company
How do I liquidate my company firstly depends on whether your company is solvent or insolvent.
Choosing to liquidate your limited company (often referred to as ‘winding up’ a limited company) is an option available.
The company ceases trading, along with employing people. The company will not exist once removed from the Companies House (“struck off”) register.
If you liquidate a company, the company’s assets remain used to pay off its debts. Any money left goes to shareholders. You will require a validation order to access your company’s bank account.
Make sure you act within three months of the liquidation date to secure the balance of the company’s money once payment of all company debts.
Three types of liquidation exist:
Liquidating a solvent limited company
How do I put my Limited Company into Liquidation?</h3
Liquidating a company, you do not want to run anymore
Usually, directors and shareholders opt to use a member’s voluntary liquidation, provided the company you wish to close is solvent, and you either:
- Want to step down from your business with no successor in place;
- No desire to manage the company anymore.
Passing a resolution for members’ voluntary liquidation, you must:
For those companies registered in England and Wales:
- Make a ‘Declaration of solvency‘;
For companies registered in Scotland:
Review the assets of the company’s liabilities, assets and liabilities, before composing the declaration.
Make a declaration of solvency.
Compose a statement declaring the directors assessed the company’s financial status and believe it can pay its debts with interest in full.
Additionally, include the:
- Name and address of the limited company;
- The company directors names and addresses;
- Timeline for when the company shall pay all its debts in full? Total payments are required within the 12 months starting the date of the liquidation date.
Ensure you include the statement of the company’s assets and liabilities.
Liquidating an Insolvent Limited Company
Liquidating a Limited Company with a Creditors Voluntary Liquidation
Arrange liquidation with your creditors
Once the directors agree the company requires liquidation, then directors of the company may recommend a company ceases trading and liquidated if:
- The company cannot pay its debts (it’s ‘insolvent’);
- Enough shareholders agree.
Get shareholders’ agreement
- Call a meeting of the shareholders and invite them to vote.
- 75% of shareholders (based on the value of shares) must agree to the termination to approve a “winding-up resolution.”
Once the resolution is approved, then:
- Appoint a licensed insolvency practitioner as liquidator.
- Forward the original resolution to Companies House within 15 days.
- Advertise the resolution within 14 days in the Gazette.
Your responsibilities as a director will change.
Apply directly to the court for your company to be liquidated
A company director may request a court to order the company to cease trading and liquidate, referred to as “compulsory liquidation.”
You’re required to disclose to the court:
- The company cannot pay its debts of £750 or more
- 75% (by the value of shares) of shareholders agree the court can wind up the company.
Duties of an appointed liquidator
What the liquidator does
The liquidator is a licensed insolvency practitioner or court-appointed official receiver responsible for operating and managing the process.
As soon as the liquidator is appointed, control of the company transfers to them away from the directors.
- Realise company assets;
- Comply with timelines for statutory paperwork;
- Settle legal disputes and outstanding contracts;
- Pay liquidation costs along with the final VAT bill;
- Ensure creditors remain informed and include them in judgments where required;
- Examine directors conduct. Report on why the business failed;
- Pay creditors;
- Remove the company from the companies register.
Re-using former company names
If your business is in:
- Compulsory liquidation;
- Creditors’ voluntary liquidation.
You acted as a former director when the liquidation occurred, and used the company’s former name. Therefore, you possibly face a ban for five years from:
- Promoting any business with the same or similar name to your liquidated company. Including the company’s registered name and any trading names.
However, exclusions include:
- A licensed insolvency practitioner sells the business, giving the legally required notice;
- You are associated with another company using the same name as the company now liquidated for at least a year;
- You apply to the courts for permission.