my advice will help minimise the impact of insolvency
Sometimes, the failure (and closure) of a company is inevitable. It is important for directors to recognise that if your company has come to the end of its life you must take steps to minimise the loss to creditors. It may still be possible to extract the business and assets, place them in a new company and for you to continue running that new company in the future. However, it is more likely that the assets are sold and the business ceases.
A “voluntary liquidation” is just that – the directors and shareholders voluntarily take steps to place the company into liquidation, rather than it being “forced” into liquidation by a creditor. I will advise on all aspects of this but a bit more detail is given below.
creditors voluntary liquidation
This procedure only applies to an insolvent company. The process is started by the directors and shareholders who put the company into liquidation and appoint a Liquidator of their choice. Creditors then consent to that appointment of the Liquidator or choose to appoint a different Liquidator.
The Liquidator then sells the assets and distributes the funds realised, after costs, to creditors. The Liquidator must also investigate the affairs of the company and in particular the conduct of the directors. He will submit a report to the Insolvency Service for them to consider if disqualification proceedings should be taken against any of the directors.
There are many factors to consider when deciding on voluntary liquidation. It’s always worth a discussion on your circumstances before making a final decision. Please call me and I will happily talk everything through with you.
members voluntary liquidation
Members Voluntary Liquidation applies only to a solvent company. More information is here.
A compulsory liquidation is forced on the company rather than the directors or shareholders voluntarily taking steps to place it into liquidation. A winding-up petition is presented to the Court by a creditor and a Judge decides if a Winding-up Order should be made to put the company into liquidation.
Once a Winding-up Order is made, the Official Receiver becomes Liquidator of the company. The Official Receiver may decide that a licensed Insolvency Practitioner should be appointed as Liquidator in the Official Receiver’s place. The role of the Liquidator and/or Official Receiver is then the same as in a Creditors Voluntary Liquidation.