If your company is encountering financial difficulties, there sometimes comes a point when, no matter how hard you try to fix them, the problems cannot be overcome.
When you reach this point, you should (quickly) seek professional advice to work out your best option.
One popular option is to voluntarily liquidate the company with a Creditors’ Voluntary Liquidation (CVL). This is as opposed to waiting for your creditors to petition for the company to go into liquidation
Here are a few reasons why you might voluntarily liquidate your company…
You will have more control
Voluntary liquidation gives company directors an element of control over their situation. You can decide when to start the statutory process that leads to liquidation and you can work with your choice of Insolvency Practitioner to get the company wound up in a fair and controlled fashion. The Insolvency Practitioner has to follow the Code of Ethics and act professionally, ensuring that he will be independent.
If your company is forced into compulsory liquidation by its creditors (i.e. the people and companies who are owed money), then they control the timing and the liquidation may be administered by the Official Receiver or an Insolvency Practitioner proposed by the creditors. This leads to a lot of uncertainty which most company directors would prefer to avoid.
It is much cheaper than it was
The cost of a CVL has come down considerably in the last few years. Whilst some Insolvency Practitioners are still charging £5,000 and upwards for a simple CVL, the insolvency market has changed considerably. You can now get a very affordable CVL service
At Clarke Bell, our fee for a CVL starts from just £1,995 (all inclusive). This makes a CVL a more viable option than ever before – because it is an affordable way to deal with all your legal obligations as the director of an insolvent company.
You can start afresh easier
Having had your company go through a liquidation process, you may then wish to start a new company. In this situation lenders and other professionals (such as Accountants) may not be as keen to work with you and your new company when they see that you let your old company be forced into compulsory liquidation.
It is not uncommon for a company to run into financial problems, but it generally looks better if the company directors are seen to have tried to deal with the problems in a pro-active way. So, by voluntarily liquidating your company, these professionals you deal with are likely to be happier to work with you and your new company.
Also, by working with the liquidator, you may well be able to purchase assets from the old company and use them in your new company.
You can reduce the likelihood of legal action
When company directors try to avoid taking necessary liquidation action, creditors are often more likely to take legal action in an attempt to retrieve the money they are owed.
This can cause a lot of problems for company directors – including the time and resources spent on dealing with the legal actions. It also reflects badly on the business owners, as many people will think the directors are deliberately trying to avoid paying their debts.
However, by opting for voluntary liquidation, directors are showing their creditors that they are doing everything they can to resolve their problems in a legal and responsible way.
Free expert help for you
The thought of liquidating your company can be daunting. Should you pro-actively get your company placed into liquidation? Or just sit back and see what happens?
We will help you determine the best option for you to take.
Our advice is free, and our liquidation costs are cheap (from just £1,995 for a CVL).
Get in touch with the team at Clarke Bell today (0161 907 4044) and we will help you deal with your company’s business debts in the best way possible.