FAQs Below

The purpose of a liquidation is to close down a company in an orderly way using a liquidator. There are three types of liquidation. A Creditors’ Voluntary Liquidation, a Compulsory Liquidation and a Members’ Voluntary Liquidation.

– Creditors’ Voluntary Liquidation (CVL) – This is a liquidation of an insolvent company – generally, a company where the amount of money owed is greater than the value of assets held. This type of liquidation is started by the directors of the company and involves the shareholders and creditors.

– Compulsory Liquidation – This is also a type of liquidation for an insolvent company. However, rather than the directors starting the procedure and choosing their nominated liquidator,  a creditor instead starts the process by issuing court proceedings to wind up petition in the Court and the company enters liquidation by a Court Order. The government’s liquidator (known as the “Official Receiver”) will deal with the company’s affairs.

– Members Voluntary Liquidation (MVL) – This is a liquidation for a solvent company, i.e. where the company will be able to afford to pay all of its debts. The liquidation is also started by the directors of the company and is often used when a company is no longer required, such as when the directors are planning on retiring.

A company’s shareholders place the company into liquidation by holding a shareholder’s meeting. This requires at least 75% of the members voting at the meeting. The shareholders will also pass a resolution nominating someone to act as liquidator of the company, which is usually nominated by the directors.

Following the shareholders’ meeting, a ‘decision procedure’ is held for the company’s creditors. This allows the creditors to vote for who they wish to act as the liquidator. Generally, the creditors will approve the members choice of liquidator. The creditors’ meeting is usually held 15 minutes after the shareholders’ meeting.

To allow creditors to vote, we either arrange for a ‘virtual meeting’ which will take place by conference call or we use a procedure called ‘deemed consent’. This means that unless a certain number of creditors object by a specific date, the members’ choice of liquidator will be automatically appointed. We will advise you which method we intend to use.

Engagement – Sign up though our website using our Simple 5 stage procedure. All documents are e-signed and you can arrange your payment to us by credit or debit card. From this point onwards you can direct all creditors to us. We will also advise HMRC that the company will shortly enter liquidation.

Information – You will receive an email to our secure client portal, where you will find a list of all information that we need (we will also email this list to you). You can log in to the portal at your leisure to upload the documents and information that we need.

Signing Documentation – We will provide you with the necessary paperwork to place the company into liquidation, which will be e-signed.

Meetings – We will arrange for all practical and formal steps required to place the company into liquidation.

Once the company is in liquidation, we will arrange for all matters to be dealt with promptly, such as closing the company’s bank accounts and HMRC schemes (VAT, payroll, etc) and advising creditors and others that the company has entered liquidation.

Once you have signed up we will provide a full list of information that we need. This will include information on the company’s assets, creditors, and employees. This information can be emailed, but it is quicker if you upload it through our secure client portal which we will email you a link to access.

Once you have signed up we aim to place your company into liquidation within 4 to 6 weeks. We need a certain amount of information regarding the company’s situation to prepare the paperwork for the liquidation which you will need to supply. We will be on hand throughout the process should you need any assistance with the information that needs to be supplied.

Part of a liquidator’s job is to achieve the best price possible for a company’s assets. If the company has any assets then an independent valuer will be instructed to value the assets and will then sell the assets to the highest bidder.

If the current directors offer the most then it is likely that their offer will be accepted when the value of the company’s assets is quite low, the director will generally be able to give the best offer because the costs of collecting and arranging to sell the property to a third party will mean it is not economic to take the assets away for sale, for example at an auction.

If you think that your company is solvent, you should contact us to discuss how we can assist with placing your company into members voluntary liquidation. The process is very similar and we will will offer you a very competitive fixed-price quote.

Simple Liquidation was developed specifically to allow directors a Simple and cost-effective way to liquidate their company. Directors can take control of their situation and avoid the risks associated with trading an insolvent business. The Licensed Insolvency Practitioners who will liquidate your company have over 30 years of liquidation experience between them and are regulated by the Insolvency Practitioners Association and the Institute of Chartered Accountants in England and Wales.

In most cases, directors of a limited company are not personally liable for company debts. The company is a separate legal entity. However, personal liability can arise if a director has given a personal guarantee, engaged in wrongful trading, misfeasance, or breached their statutory duties. A licensed Insolvency Practitioner will review the company’s conduct as part of the liquidation process.

If a company enters liquidation and ceases trading, employees are usually made redundant. Employees may be able to claim certain unpaid wages, holiday pay, notice pay and redundancy from the Redundancy Payments Service, subject to statutory limits.

Wrongful trading occurs when directors continue to trade and incur further debts at a time when they knew, or ought to have known, that the company had no reasonable prospect of avoiding insolvency. Directors are expected to act in the interests of creditors once a company becomes insolvent.

Yes. HMRC is one of the most common petitioning creditors in compulsory liquidations. If tax liabilities such as VAT, PAYE or Corporation Tax remain unpaid and no arrangement is agreed, HMRC may issue a winding up petition through the Court.

If a company has no debts and is no longer trading, it may be possible to apply to have it struck off the Companies Register. However, if the company has outstanding debts or potential claims, a formal liquidation process may be more appropriate.

In a Creditors’ Voluntary Liquidation or compulsory liquidation, the appointed liquidator must submit a report to the Insolvency Service on the conduct of the directors. This report reviews whether the directors have complied with their duties under the Companies Act and insolvency legislation.

There are restrictions on reusing a company name following liquidation under Section 216 of the Insolvency Act 1986. Directors should seek professional advice before forming a new company with a similar or identical name.

Once the company is placed into liquidation, creditors should direct correspondence to the appointed liquidator. Directors can usually refer creditors to the liquidator’s office once the formal appointment has taken place.

When a company enters liquidation, its bank accounts are typically frozen. The liquidator will liaise with the bank and arrange for the transfer of funds into the liquidation estate for distribution to creditors.

In most voluntary liquidations, trading ceases when the company enters liquidation. In certain circumstances, short-term trading may continue if it is necessary to realise assets or complete contracts, but this is controlled by the liquidator.

A Creditors’ Voluntary Liquidation aims to close the company and realise assets for creditors. Administration is a separate insolvency procedure designed to rescue the company as a going concern or achieve a better outcome for creditors than liquidation.

The liquidator takes control of the company’s assets and will realise them for the benefit of creditors. Assets may include stock, equipment, vehicles, property, book debts, and intellectual property.

Companies with Bounce Back Loans or CBILS facilities can enter liquidation if they are insolvent. These loans are unsecured company liabilities unless personal guarantees apply. The appointed liquidator will deal with the lender as part of the process.

Yes. If the company cannot afford to pay its tax liabilities and is insolvent, a Creditors’ Voluntary Liquidation may be appropriate. HMRC will be treated as a creditor in the liquidation.

If a director has withdrawn more money from the company than was owed to them, this may create an overdrawn director loan account. The liquidator has a duty to review and, where appropriate, seek repayment of that balance for the benefit of creditors.

If a dormant company has no debts or liabilities, it may be possible to apply for strike-off instead of liquidation. However, if there are outstanding liabilities or risks, a formal liquidation may be more appropriate.

If a company has no realisable assets, liquidation may still proceed. In such cases, directors usually pay a fixed fee for the process. The liquidator will still complete statutory duties and reporting requirements.

Liquidation does not automatically result in disqualification. However, the liquidator must report on director conduct. If misconduct is identified, the Insolvency Service may investigate further.

Creditors are given the opportunity to participate in the decision procedure. In most cases, they approve the proposed liquidator. If there is disagreement, creditors may nominate an alternative liquidator.

Leases are reviewed by the liquidator. The landlord becomes a creditor for any unpaid rent and potential future claims, subject to insolvency law provisions.

The process can be handled digitally, including document signing and communication. However, a licensed Insolvency Practitioner must still be formally appointed to conduct the liquidation.

In compulsory liquidation, the Official Receiver is initially appointed by the Court to take control of the company’s affairs. An Insolvency Practitioner may later be appointed in place of the Official Receiver.