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Directors may choose a liquidation process to close their limited company with shareholder approval. (also named winding up a company).

The company ceases business and employing individuals. The company no longer exists once removed (‘struck off’) from the companies register at Companies House.

When you liquidate a company, the company assets are realised to pay the debts of the company. Once actioned, if any money is left? Then it is paid to shareholders.

Any monies not distributed to the companies shareholders by the time the company is removed from the register will be the state’s property.

If you wish to reclaim monies after that? Then you are required to restore dissolved company.

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What Is Liquidation?

Liquidation guides a business to closure while realising its assets to creditors and shareholders. It is an event when a company is insolvent; therefore, it cannot pay its debts when they fall due. As company ceases, assets sold, the Liquidator pays creditors and shareholders, subject to their claims’ priority.

Licensed Insolvency Practitioners act as the appointed Liquidator.

Advice, therefore, is vital to protect creditors interests during attempts for business rescue.

If I can’t, afford to pay for a Liquidation.

A Liquidation if managed correctly, and at the earliest indication of trouble? Then directors need not pay to liquidate a limited company.

HBG Advisory aim always to ensure a company liquidation remains self-funding. Contact HBG Advisory for Liquidation Advice.

A common misunderstanding is that if a company is liquidated by the court, or liquidated voluntarily, then a director will need to pay out personally to pay the liquidators fees. If detected early stage and directors act fast. Then insolvency can usually be paid for by company assets.

Can I Liquidate My Limited Company Myself?


Then how do I liquidate my company?

Any Insolvency process requires the appointment of a UK Licensed Insolvency Practitioner.

To merely strike an insolvent company off is illegal.

Liquidate my business – Meaning

The process in the UK to close a Limited company down. Many countries adopt a similar method as the UK including, Australia, New Zealand, Republic of Ireland, United States, Cyprus and Italy.

The sale of company assets, therefore, allows the Liquidator to pay creditors from liquidation proceeds. Liquidation also refers to a compulsory situation as winding-up of the company. Winding-up the affairs though, can be a voluntary reference as with a creditors voluntary liquidation CVL.

The process then may also describe a company wishing to strip out some of its assets.

Conclusion of a company liquidation means directors, however, therefore, must cease using the business name of the former company. HMRC Time To Pay agreements to stop and subject to the Liquidator’s report.

With an Insolvent liquidation, however, all company debt stop, and the company ceases to exist. Meanwhile, with a solvent liquidation,(MVL); however, the company pays all the company debt and closes.

The final part of company liquidation is to strike the company from the register at companies house.

What does Voluntary Liquidation Mean?

Voluntary action by directors not enforced through court action as is a Compulsory Liquidation.

Voluntary liquidation for a liquidation means prompted when your limited company financially may longer function. Usually, your limited company has severe creditor pressure chasing invoices or other debt outstanding. Perhaps the company has a winding-up order and is days away from a compulsory liquidation? Directors, though, may conclude that their company is insolvent and no longer viable.

Therefore, opting for liquidation means you’re using the process to close the company legally by appointing professional licensed help while at all times protecting creditors of the company.

Once the Insolvency Practitioner (IP) is appointed, your director’s position ceases. You will though still be required to help, the liquidator throughout the liquidation process.

What does it cost? – Who Pays?

Cost varies on the size of the company and the issues. Assuming the company is Insolvent an a Creditors Voluntary Liquidation is, therefore, the process chosen. The cost is then recovered by time working on the case. Time is a significant cost factor. Therefore small limited companies with few assets and closure costs vary from £3,000 to £6,000 plus VAT. That includes an insolvency practitioner’s appointment to assume office as Liquidator, creditors’ meeting and statement of affairs together with section 100 reports.

Additionally, statutory costs are then incurred:

  • Appraising and selling the assets with third-party RICS valuers;
  • Collecting outstanding monies due to the company pre liquidation;
  • Notifying directors of their duties;
  • Redundancies and employees’ claims;
  • Resolving disputes and any outstanding contracts;
  • Apprising HMRC, Companies House and the Insolvency Service regarding company position;
  • Examining transactions leading up to the closure of the company;
  • Appraising and selling the assets with third-party RICS valuers.
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Cost to liquidate a solvent company

However, to liquidate a limited solvent company depends really on time costs and the number of issues. For further guidance view Members Voluntary Liquidation (MVL).

How do I Liquidate My Company?

Liquidation – Liquidate your Limited Company

Liquidating a limited company is an insolvency process used to close a UK registered company. Various processes exist. Supervised by a licensed insolvency practitioner referred to as the Liquidator.

During the process, the Liquidator appoints independent valuers and agents to sell assets of the company.

The Registered office changes to the Liquidators address.

Creditors complete a proof of debt form, which the Liquidator proves the debt and ranks it in order of payment priority.

During the process, the Liquidator has the company struck off the registrar of companies. Therefore, the dissolution is the final remains of the liquidation.

Internal links to guide you:

  • Voluntary liquidation of a solvent company
  • Voluntary liquidation of an Insolvent Limited Company with Debts;
  • Can I liquidate My Own Limited Company;
  • Compulsory Liquidation.

Liquidation – Company after Liquidation

A company liquidated, has ceased trading, therefore, removed from companies house register and closed.

Why do companies liquidate?

  • Companies enter a form of liquidation to realise it’s assets. However, the reasons to liquidate depends on if the company is insolvent. Therefore not able to pay its creditors. Or the company is solvent though wishes to cease trading and realise assets to pay to shareholders.

Order of paying creditors in a liquidation?

The order of priority creditors of a company is repaid is important. we list below the order that creditors rank in liquidation once all the assets are realised and monies collected owing to the company:

  1. Secured creditors.
  2. Preferential Creditors; preferential creditors include HMRC & Company Employees. Note though. Effective December 1st 2020. HMRC reacquired it’s preferential status.
  3. Fixed and floating charges: secured by a debenture registered at companies house.
  4. Fixed charge creditors: Usually property and fixed machinery.
  5. Floating charge creditors:
  6. Unsecured creditors:
  7. Connected unsecured creditors:
  8. Company Shareholders.

What Types? – Closure options?

  • Creditors Voluntary Liquidation ( CVL ) – CVL is a process to close an insolvent limited company.

The company then ceases to exist, upon liquidation. You, as a director along with shareholders though, may vote your choice of Liquidator.

  • Members Voluntary Liquidation. ( MVL ) – An MVL procedure closes down a solvent limited solvent company. You have the opportunity to appoint your choice of Liquidator.
  • Compulsory Liquidation. – This type of liquidation you do not have any control. A creditor may petition to wind your limited company up in court; the official receiver appointed.

How do I find the right Insolvency firm for my company?

HBG Advisory offers directors, direction and results, however, protecting your privacy and remaining confidential.

Our highly experienced team deal with companies in financial distress. We, therefore, set out our plan with directors at the pre liquidation meeting. Consequently, you will then be aware of your situation and have no surprises down the line. We have many years of experience dealing with aggrieved creditors and the HMRC.

For further help and you want to speak to someone about:

  • Cost
  • Time
  • Types

What are the Possible Outcomes for Directors?

What are the Liquidation benefits?

Company directors need to ensure not to trade while insolvent. If so, and the company enters liquidation.

It may then impact on them personally. Once appointed, Insolvency Practitioners have a duty to examine previous decisions by the directors before they are appointed liquidator.

Directors are required to ensure that they acted in the best interests of the creditors at all times. To maintain protection from personally liable issues, directors need to keep tight control of the companies’ finances and seek immediate professional help if in doubt.

So understanding the role of the liquidator should help you avoid trading insolvently and not taking care of creditors over and above that of themselves. Failing which they may face charges of fraudulent or wrongful trading. If proven, then you fall exposed to personal liability of company debts.

View MEET THE TEAM at HBG Advisory or click on virtual meeting ( Top of Page ) and arrange a safe, private meeting in the comfort of your own home.

For help on redundancy payments while a director view REDUNDANCYCLAIM.COM.

Liquidating and how you will then move forward during the PANDEMIC. 

Support Is Just A Call Away
Seeking support with your under performing business?We can remove all the stress while allowing you to move forward with your business removing the fog for good. Please call us on 0800 612 5448 or Book A Virtual Meeting safe and private. We help directors daily to navigate the complexities of financial difficulty.
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