How do I liquidate my company? This is a question I am often asked and it is normally asked in relation to an insolvent company.
The answer is very simple - there are 2 options - a voluntary liquidation or a compulsory liquidation.
Which is right, depends on what the directors/shareholders who asked the question (How do i liquidate my company?) want to achieve and how much help they want through the process.
The voluntary liquidation is the easiest option, all it takes is for a meeting of shareholders to pass a special resolution (75% or more of voting shareholders agree) to place the company into liquidation and pass an ordinary resolution (greater than 50% of voting shareholders agree) on the person to be appointed as liquidator. If the company is unable to pay its debts (i.e. it is insolvent) then there will be a meeting of creditors held (usually) straight after the shareholders one to complete the formality of appointing the liquidator.
The shareholders meeting has to be held with a minimum of 14 days notice ??being given to shareholders (unless 90% or more of shareholders consent to it being less), whereas the creditors meeting has to be held with a minimum of 7 clear days notice being sent in the post to creditors. The meeting of creditors must also be advertised in the London Gazette and any other medium if thought appropriate or necessary.
You should instruct a firm of insolvency practitioners like mine to assist you with this to ensure all the fundamental components of the process are fulfilled, which will avoid any future complications or challenges to the process. I understand how difficult it is to take the decision to liquidate your company, so my firm take the stress and hassle away from you by performing the various functions on your behalf.
It is also possible to put a company into liquidation via the court - a compulsory liquidation or winding up - but this is less common. Whilst this is often a cheaper option, a director and/or shareholder will not get as much help with the process ?from an insolvency practitioner and the director(s) can easily find themselves falling foul of the strict rules in relation to reuse of company name (Section 216 of the Insolvency Act 1986), something that can be easily covered in a voluntary liquidation.
If the company has assets, these will be sold for the benefit of creditors. If a company has book debts, these will be collected in for the benefit of creditors. If the directors/shareholders wish to commence trading in business again, they will either have to start from scratch or buy the assets from the liquidator. Buying the assets back is very quick and simple in a voluntary liquidation, but much more drawn out in a compulsory liquidation leading to a possible break in trade. They must also make sure they do not fall foul of the resuse of name matters mentioned above. At BCR we ensure this is fully covered and that directors do not fall foul of these rules and receive the possible criminal and civil sanctions for not getting it right.
Once the company is in liquidation the liquidator will have many tasks to perform, but the majority of these will have no impact on the people who initially wanted to know 'How do I liquidate my company?', so the directors can concentrate on their new future without the burden of the company they used to run.
So to recap, how do I liquidate my company?
Board meeting to agree to commence process;
Instruct insolvency practitioners to assist;
Notice to members (at least 14 days unless agreement received to less);
Hold meeting and pass resolutions;
Company is then in liquidation (but a creditors meeting needs to be held to fully commence process if company is insolvent).
To commence the process of liquidating your company, contact me on 0161 870 1920 or email
[email protected]
