With businesses across the UK facing rising debts due to a decline in sales caused by the coronavirus pandemic, it’s no surprise that liquidation companies uk are more popular than ever. The process provides a controlled and professional solution to wind-up your business in a legally compliant manner, giving creditors time to submit their claims and closing the company down in a stress free way. It also offers a clear break for directors who can move on to new ventures whilst still being able to claim redundancy payments through government schemes.

There are two types of liquidation: members’ voluntary liquidation (MVL) and creditors’ voluntary liquidation (CVL). MVL is typically chosen when a solvent company decides to close down and distribute its assets among shareholders. In order to proceed with MVL, the directors must make a statutory declaration of solvency which confirms they have enough funds to pay all of the company’s outstanding debt within 12 months.

Breaking Down Costs: How Much Does It Really Cost to Liquidate a Company

The main duty of a liquidator is to realise the company’s assets and discharge the company’s liabilities to the extent that the assets allow. As such, they have a legal obligation to gather information on the company accounts and records, creditor debts, and firm’s cash flow. They will arrange meetings with both creditors and shareholders. Creditors are required to be given seven days notice of a meeting and shareholders two weeks.

Once a company enters liquidation it ceases trading immediately. Directors of the company will not be able to work with or for another business in the same way as they normally would and will be prohibited from using the company name. Any breach of these restrictions could lead to the director being banned from becoming a company director for 2 to 15 years.