How to liquidate a company with no money

We’re sorry to hear that your company has reached a stage where liquidation is the only answer. At this stage, it’s not uncommon for businesses to struggle with very little money in the bank. In this blog, we’re letting you know how to liquidate a company with no money.

We understand this is likely a very stressful time for you. Unfortunately, many businesses can struggle with money through no fault of their own. For example, you may have a couple of larger clients who haven’t paid you on time.

We’re sure that you have many questions about liquidating your business, so we’re here to offer advice on the most suitable steps for you to take.

Which liquidation process should I choose?

Firstly, it’s great that you’ve recognised that your business is not working in its current format and may need to close. At the moment, if your business has creditors that it can’t afford to pay or its liabilities are worth more than its assets, then it’s an insolvent company.

However, just because your company doesn’t have any money doesn’t mean that it has creditors. This is very important as it determines which method you can use to close the business.

If your company has creditors that you cannot afford to pay…

Then you need to use a Creditors Voluntary Liquidation. This is the best option for you as it means that any unsecured debts are written off. Some debts, such as secured debts and personally guaranteed debts, will not be written off and will become your responsibility to settle.

A CVL is a great option as it reflects positively on the director, as they are acting in line with the creditor’s interests. During this liquidation process, the director can choose their own licensed insolvency practitioner, and they will face less director scrutiny during company liquidation.

Another option is to be placed into compulsory liquidation, although this is always best avoided if possible. Directors will have very little control over the situation and can face increased company director scrutiny.

Both of these result in limited company information being removed from Companies House.

company liquidation no money

If your company has no money but also no creditors to pay…

You can use a strike-off procedure. This process costs just £33 and does not need an insolvency practitioner to assist. You can complete this process yourself by filling out a DS01 form.

Be aware that the intention to strike off will be advertised in the Gazette for people to see. If there are no objections, the limited company can be closed and removed from the Companies House register.

You cannot use a strike-off procedure if you have an outstanding bounce-back loan or any other company debts. So, if you have creditors, do not attempt to strike off.

Even if your company is approved to be struck off, your creditors can reinstate the company for a number of years afterwards, and you will face personal liability for paying back the money owed.

My company has no money, how do I pay for liquidation?

Unfortunately, if there are no assets or cash left within the business, then the responsibility of paying for a formal insolvency liquidation procedure falls to the company director. They have a few options for funding the liquidation.

Pay for the liquidation yourself

This may not be ideal for you, but using personal funds could also be your only option. This could involve selling your personal assets. You should be wary of taking out personal loans to cover your liquidation fees.

See if you can claim director redundancy pay

Many directors are unaware that there is even such a thing as director redundancy pay. This can only be claimed if you meet specific criteria, such as having worked in the company for at least two years for 16 hours per week.

The amount of redundancy pay you are entitled to depends on the length of time you have worked at the company, in the same way that it works for employees.

It’s worth seeing if you are eligible and how much money you could claim, especially if you are struggling to find ways to pay for your liquidation.

You may need to provide evidence that you have worked in the company and that you have received a monthly wage. This could be in the form of a work contract or payslips.

Selling company assets

If your company has no money left over then it’s unlikely that you have assets left over. However, if you do have company assets, these can be sold to generate money for the liquidation.

An independent valuation company must value all assets, and you must sell them at market value. You should retain all paperwork regarding the valuation and the sale of assets, as you may be asked to provide evidence at a later date.

What if none of the above options are available to me?

If you find yourself in a situation where none of the options we mentioned are available to you, then you may need to wait for a creditor to force your company into compulsory liquidation.

This process begins with a winding-up order which outlines a court date by which the money owed must be settled. If you cannot pay the money by this date, the company is entered into compulsory liquidation.

Some company directors find it easier to get in contact with their creditors and invite them to liquidate the company as they cannot afford to pay their debts. Compulsory liquidation is usually a last resort for directors. Voluntary liquidation is usually the best option for a company with no money if other methods can be used to fund the process.

We hope this blog has been helpful on how to liquidate a company with no money. Please feel free to contact us if you need any support, and we will be happy to help. Seek professional advice as soon as you can regarding financial worries.

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