Liquidating limited company

Liquidation is a formal insolvency procedure in which a company is brought to an end; all of its assets are liquidated and the proceeds from the sale of assets is used to repay creditors.There are two main types of liquidations for insolvent companies– compulsory liquidation and creditor’s voluntary liquidation (CVL).When you are considering liquidation due to financial problems, take the time to compare all of the available options.

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Insolvency Practitioners are required for the liquidation process, and these professionals have the responsibility to act as an impartial, third-party and to oversee the liquidation from beginning-to-end.

Their role encompasses various responsibilities which include, but are not limited to: investigating the affairs of the company and the directors; checking for any improper or illegal transactions that may have taken place, as well as distributing the realised assets to the appropriate parties.

Liquidation refers to the procedure in which a limited company is brought to an end, with any assets being liquidated and redistributed.

The company is then struck off the registrar of companies, and this is known as dissolution, which is the final stage of the liquidation process.

There are two ways of liquidating a company voluntarily, and the route you take will depend on whether the company is solvent, or insolvent. All three examples of liquidation are covered briefly on this page.

We will explain the two options for voluntary liquidation and also the third procedure which is outside of the director’s control and is usually initiated by the company’s creditors.

For this reason a CVL should be considered as a last resort, only after alternative options that would allow the company to continue trading have been examined (i.e.

– pre-pack administration, company voluntary arrangement (CVA), or asset financing).

In this section, we will cover the two forms of voluntary liquidation available to companies within the UK.

A Creditors’ Voluntary Liquidation is also known as a ‘CVL’, and this procedure is only appropriate for insolvent companies and can be chosen by a company director if the company is unable to pay its bills on time.

After every liquidation process the liquidator is required to investigate all actions taken by the directors while the company was trading insolvently.

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