If your company has cashflow problems, you are likely to have already had advice regarding the liquidation process. However, you may be interested to know what happens afterwards, so that you don’t feel like you’re heading into the unknown.
What happens after a company goes into Liquidation?
If your company is insolvent and has gone through the process of a Creditors’ Voluntary Liquidation (CVL) any assets will have been sold and used to pay off creditors. Once the liquidation process is complete, your company will be taken off the register at Companies House and will subsequently cease to exist.
Having followed the CVL process correctly, you can feel comfortable in the knowledge that you have acknowledged all your legal duties as a director. In most circumstances, you will be able to set up a new company and start trading again.
Certain caveats may still affect you and/or other directors of the liquidated company – for example, if there are personal guarantees in place they will still need to be satisfied. Also, if a director owes any money to the company, that will need to be repaid.
Setting up a new company
Going through liquidation does not stop you from setting up a new limited company once the process has finished – unless you have been disqualified by the Insolvency Service for negligent actions or wilful dereliction of your duties.
If you do intend to set up a new company, there are a few factors you need to take into account:
- Re-using your company name – You’ll be prohibited from using the same name (or very similar) as the company that was placed into liquidation – for 5 years from the date of liquidation. This includes any websites and trading names. Failing to adhere to this legislation is considered a criminal offence, not a civil one.
- Using the same suppliers – If you intend on using the same suppliers with your new company, you’ll likely need to rebuild your relationships with them. Some suppliers may request that you trade with them on cash terms, until they are satisfied you can once again be granted a credit account. Others may seek ransom payments of any debt owed by your old company, which you should resist if possible and seek alternative suppliers.
- Issues with tax debt – HMRC may request a deposit or bond to be paid before it will allow you to submit returns, if any issues arise with the level of tax debt. If you’re unable to submit returns, you won’t legally be allowed to trade. Also, if you fail to pay your future liabilities on time, HMRC will use a requested bond.
Moving forward after liquidating your company
When your company is suffering from cash flow problems and struggling to get out of financial difficulty, the most important thing is not to delay dealing with the issues. If liquidation seems imminent, the longer you leave things the more problems you are likely to experience.
For more information on any of the above, just contact us. Our advice is free and totally confidential.