What is a liquidation?

A creditor’s voluntary liquidation is the process of closing a ltd company down that has become insolvent.

Have a look at these questions:

  • Has the company run out of money?
  • Is the company unable to pay its debts on time?
  • Is the company is no longer viable?
  • Are your creditors are threatening court action?
  • Are you unable to pay back your bounce-back loan?

If you have answered ‘yes’ to any of them you may be thinking about the best to close your company.

Liquidation is the formal closure of a ltd company and any assets of the company are realised and distributed to the people that the company owes money.

By placing an insolvent company into liquidation can show that you are acting responsibly as a director and you are carrying out your legal obligations.

  • All unsecured debts will be written off in a liquidation
  • All legal action and enforcement action is stopped
  • Staff who are due redundancy can claim it from the government
  • You, the director, may also be able to claim up to £9,000 in redundancy pay.
  • You will need to appoint a licensed insolvency practitioner to carry out the process and their charge will range from between £4-£8,000. Gain advice early if you believe you can’t afford an insolvency practitioner
  • If you have been registered for PAYE for over 2 years you may be entitled to director redundancy which you can use to pay for your liquidation.

The most important thing if you’re considering closing your company is to get advice early and understand if there are any potential implications for you personally.

Any questions please let me know.

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