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What Is Company Liquidation?

Company liquidation is the formal process of closing a company.

Liquidation involves an insolvency professional ‘winding up’ the company by taking control of the organisation, stopping trading and selling its assets to create ‘liquid’ cash which can be used to pay off creditors. Any leftover cash is then distributed amongst shareholders.

By the end of the liquidation process, the company will have stopped trading, it will have been removed from the register at Companies House and it will cease to exist.

Types of Liquidation

There are three types of liquidation under UK law. Two of these refer to cases of voluntary liquidation - where the directors of a company choose to wind up the business. The other case is of compulsory liquidation - where the liquidation is ordered by a court.

Creditors’ Voluntary Liquidation (CVA) occurs when a company can no longer pay its debts and has therefore become insolvent. In these cases, the shareholders of the company vote to allow the business to go through the process of liquidation.

Compulsory Liquidation occurs when a company is ordered to be wound up by a court order. This usually happens when creditors raise a ‘winding up petition’ with the appropriate court, due to unpaid debts.

Members’ Voluntary Liquidation is essentially a ‘solvent liquidation’. This takes place when a business is still solvent, but the company shareholders decide to wind up the company.

In cases of Creditors’ Voluntary Liquidation and Compulsory Liquidation – where the company is insolvent – a qualified insolvency practitioner needs to be appointed as a liquidator in order to carry out the liquidation proceedings. Even in cases of Members’ Voluntary Liquidation – where the company is solvent – it is necessary to appoint a qualified Insolvency Practitioner.

More information

The prospect of facing company liquidation can be worrying and stressful. Our aim is to make the process as simple and stress-free as possible for our clients.

Acting fast is key. Insolvency issues won’t just go away, so facing up to the issues and trying to tackle them as early is possible really helps to get the best results.

Our service is efficient, professional and confidential. We have years of experience in company liquidation and have acted as liquidator for large companies and small companies alike. To find out more about company liquidation, what the process involves and if it is right for you, simply get in touch with us. We can provide free advice with a quick phone call, email or live chat, and we can visit your office at your convenience to discuss your situation.

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