Can An Insolvent Limited Company Liquidate?
That is what the process of a liquidation performs in corporate insolvency attributed to limited companies.
Liquidation triggers the termination of any leases, contracts, and finance agreements. The company may have had. Additionally, the companies employees will then be made redundant, along with company directors, enabling them to commence then claiming for redundancy, by applying to the redundancy fund with the support of the liquidator’s team.
For further information on employees issues, please read employees rights when a company is insolvent.
Liquidation also prevents the companies creditors pursuing the company for outstanding monies as they are referred to the appointed liquidator while preventing any further trading losses.
What’s Involved In The Process?
Liquidation is an Insolvency process, appointing a liquidator, enabling the formal legal closure and dissolution of a limited company. The office of a liquidator requires a Licensed Insolvency Practitioner to act.
Upon appointment, the limited company ceases immediate trading, while removing the present directors from office. The directors, though, are still required to assist the liquidator in carrying out their duties and enquiries when requested.
Liquidation removes the requirement to file tax returns, vat returns and other statutory documents for a trading company.
It usually takes eight days to place a limited company into liquidation.
The primary duty of an appointed liquidator is to realise company assets and collect all monies due along with agreeing with legitimate creditor claims.
Once all assets are realised and monies collected. The liquidator pays monies out to creditors in order of priority legally along with paying their fees first.
Directors and shareholders of the company remain not liable for any debts of the company providing they have signed no guarantees or are under investigation for wrongful trading or fraud. For further reading, please view what happens to a director of an insolvent company.
The process of liquidating a company takes approximately six months. However, it may extend if complications exist or assets of the company take longer to realise examples being, property, land and plant.
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