Choosing to liquidate a company is something that many directors do, for a variety of reasons.
When directors are looking to retire or go into an employee role, and their company is solvent, a Members’ Voluntary Liquidation (MVL) is the process they should consider.
In cases where the company is insolvent (i.e. it can’t pay its debts), directors can get the company placed into Creditors’ Voluntary Liquidation (CVL).
Whichever type of liquidation is wanted, a Licensed Insolvency Practitioner must be used.
Starting the Liquidation Process
If you are considering an MVL or a CVL, you should talk to a Licensed Insolvency Practitioner.
They are regulated professionals and will ensure that everything is handled in a legal and correct way. Here at Clarke Bell we offer you free advice, with absolutely no obligation.
When you do appoint us as your Insolvency Practitioner, we will provide you with a Payment Request and Letter of Engagement. We will then ask you for some information:
- Directors’ Questionnaire – this is for the director(s) to provide brief details of the company
- Books & Records (as applicable)
- Payroll records (as applicable)
- Formal identification documentation – for Anti-Money Laundering purposes (as applicable)
We take care of all the necessary documentation for you, and guide you through the whole process.
Instead of a CVL, can I wait for a Compulsory Liquidation?
You can, but we wouldn’t recommend it.
A Compulsory Liquidation is when the Court appoints a government official (the ‘Official Receiver’) to take control of your company because you have failed to pay your debts and are clearly insolvent.
Whilst this is an option, it is not one we would recommend.
There are severe consequences related to Compulsory Liquidation, including:
- your future credit terms from lenders might be adversely affected
- professionals (e.g. banks & other lenders, accountants and solicitors) may take a dim view on directors who took this course of action, rather than taking control of the situation
- you might be viewed as someone who has been complacent and reckless with regards to your fiduciary duties.
It is for these reasons that a Creditors’ Voluntary Liquidation (CVL) is a much better solution for liquidating an insolvent company – especially when the cost of a CVL is from just £1,995 with Clarke Bell.
For More Information on Liquidations
For free advice on liquidations – both MVLs and CVLs – contact Clarke Bell on 0161 907 4044 or [email protected]