If a business can’t pay its debts within a 12-month period, or won’t make enough profit to do so, then it’s insolvent and a company liquidation has to occur.
It can be in the form of a Creditors’ Voluntary Liquidation (CVL) or an insolvent liquidation.
They’re both the same thing and means that the company is effectively closed down and handed over to us acting as liquidator to complete the necessary final legal steps.
Our primary job will be to liaise with your creditors to establish legal claims and to begin to sell assets and distribute what money can be raised to them.
We’ll work with you at every stage including establishing the best possible strategy before we begin the liquidation process. For example, there may be the option for you to purchase assets back either individually or as a whole.
We’ll also assist you with the management of staff contracts and help you transfer them to a new business if that’s your aim. If not, then they’ll be made redundant, but we can assist in making claims for any outstanding wages, holiday pay, notice period, and redundancy from the Redundancy Payments Office — this also includes directors.
If there’s a large number of redundancies then we can work with the government’s own rapid response team to ensure employees receive timely advice on their options.
A CVL has several benefits for the directors of any insolvent company:
- Director driven process — more control
- All legal action against the company is stopped
- Chance to regroup and start again as a new company
- No chance of wrongful trading
- Apart from any personal guarantees, all historic debt including to HMRC is written off
- Outstanding finance agreements, lease agreements and employee contracts end
- Employees guaranteed to receive pay from the Redundancy Payments Office
- Company assets are available to purchase and use in a new company
- A quick and efficient procedure — a Company Voluntary Arrangement can take at least five years if not longer.
The process has five steps — 80% of which can be completed in two weeks or under.
- You instruct us to help you place your company into liquidation. The first thing we need to do is carry out a full review of the company’s financial affairs.
- Independent third-party agents are instructed to value the company’s assets and goodwill which is then appropriately marketed for sale.
- A formal statement of affairs is prepared and a report to creditors that summarises the company’s financial situation and outlines the reasons why it’s being liquidated.
- A creditors meeting is arranged to formally place the company into liquidation where the report will be made available to them.
- The liquidator begins selling and realising the assets and making the correct distribution to creditors.
The company is closing because it cannot cover its liabilities. Along with this:
- The liquidator is legally required to prepare a report on the conduct of former directors and officers of the company. Blame can be apportioned and any illegal behaviour uncovered will be reported
- Creditors will receive less in return
- The business has ultimately failed
Winding Up a Partnership
Like any other legal arrangement - partnerships also may come to an end.
It might be for business reasons, legal affairs or even personal - people and businesses change over years and one of you might want to do something else.
Fortunately, there are easy ways to dissolve a partnership just like any other legal business entity.Find out more
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