Voluntary liquidation costs & fees

How much does liquidation cost?, the cost for liquidating a company varies between £3,500 and £6,000 +VAT.

These fee’s will allow a Insolvency practitioner to assist with the statement of affairs and allowing the company to enter liquidation via an insolvency process that is know as a company voluntary liquidation.

Company liquidations have to be carried out by a licensed insolvency practitioner (IP) which have years of experience an have to carry insurance and bonds to ensure legality has taken place.

With this in mind it is this professional input that determines much of the overall cost.

Creditors’ voluntary liquidation cost

The costs associated with a Creditors voluntary liquidation fluxgate, fluctuate on the work required in the company liquidation. A fixed liquidation cost will including legal fees, accounting fees, and liquidator fees.

These fees can vary depending on the size and complexity of the company and the number of creditors involved. In addition to these costs, any outstanding debts owed to secured creditors will be given priority, leaving unsecured creditors with a smaller share of the proceeds.

Overall, creditors’ voluntary liquidation can be a costly process for a company and its creditors, but it can also provide a way to resolve outstanding debts and move forward.

Who pays for the liquidation of a company?

In most cases, the cost of liquidating a company is borne by the company itself. When a company enters into liquidation, its assets are sold, and the proceeds are used to pay off any outstanding debts. The liquidator is appointed by the company’s directors or shareholders, and their fees are usually paid out of the proceeds of the sale of the company’s assets.

However, if there are not enough assets to cover the liquidator’s fees, the liquidator may require the directors or shareholders to pay these fees personally.

In some cases, creditors may also be required to contribute to the costs of the liquidation. This typically happens if the company’s assets are not sufficient to cover all of its outstanding debts, including the fees associated with the liquidation process. In this scenario, the liquidator may request that creditors make a contribution towards the costs of the liquidation based on the amount of their outstanding debt.

Ultimately, the cost of liquidating a company is a complex issue that depends on the specific circumstances of the case, including the size of the company, the complexity of its affairs, and the number of creditors involved.

How are the liquidation fees paid?

One part of the liquidation process is for the liquidator’s to locate company assets, they will arrange for them to be valued, before realising these funds for the benefit of outstanding creditors. The liquidation fee will be realised from these assets and used to pay the liquidation fee.

Assets are not just limited to limited to cash as bank and in hand that is held by the company, they are also physical assets such as property, vehicles and machinery. Intangible assets such as any outstanding recoverable book debts or retentions are also included. If there is a shortage of cash at bank they could be sufficient assets elsewhere in the business to cover the costs of liquidation.

Their is a designated order of payment set out by law that the liquidator must follow when distributing assets. This is where the professional input of an insolvency practitioner is necessary in order to place the company into liquidation. The payment of the insolvency practitioners fees are regarded as a necessary outlay and therefore they are the first ones to get paid from company assets.

With solvent liquidations taking payment from company assets is not usually a problem. This is due to the company will have significant cash reserves from which this money can be taken.

However, when dealing with an insolvent companies, there are instances where the company has insufficient assets to fully meet the cost of the liquidation.

Company cannot afford cost to liquidate a company?

Should a company has no funds or assets to pay the insolvency costs, it is the directors responsibility to pay for the costs to liquidate the company or manage the shortfall on the company’s behalf.

Liquidators may arrange a payment plan for settling the liquidation fees if you cannot afford the full fee up front. This will need to clarification for the liquidator during your initial discussions.

Funding the company liquidation cost

Funding the company liquidation cost is a crucial aspect of the liquidation process. When a company faces liquidation, it incurs various costs associated with the winding down of operations, settling debts, and distributing remaining assets.

These costs can include legal fees, employee severance payments, creditor payments, and administrative expenses. Properly funding the company liquidation cost is essential to ensure that all obligations are met and the liquidation process proceeds smoothly.

Companies need to explore various financing options, such as utilising existing company assets, securing loans, or seeking external investments to cover these costs.

Adequate funding is vital to avoid delays or complications in the liquidation process, and professional financial advice can be invaluable in navigating this challenging phase of a company’s life cycle.

Are you entitled to director’s redundancy

If your company enters liquidation and you are entitled to redundancy you can request that the redundancy payment is used to pay the voluntary liquidation costs.

Directors are not aware that they may be entitled to a redundancy payment which is authorised by the RPO (Redundancy Payments Office), other entitlements like notice pay and un-taken holiday payments are also included within the claim.

Redundancy claims can help toward insolvency costs if there are no other assets to realise to pay the liquidators fees, the following criteria needs to made to make a claim:

• You are on your companies PAYE schedule 
• You have been for employed over 2 years
• You was requested to work a minimum of 16 hours a week for the company

Get a comprehensive liquidation quote today!

When considering liquidation, obtaining a liquidation quote is a crucial step in the process. A liquidation quote provides an estimate of the value that can be realized from selling off assets or inventory. This quote serves as a guiding factor, helping individuals or businesses make informed decisions about whether to proceed with liquidation and how to strategize their approach.

Obtaining a liquidation quote involves liquidation specialist to assess the assets or inventory to determine their market value, taking into account factors such as condition, demand, and current market trends. They analyze the potential resale value and consider any associated costs, such as transportation, storage, or handling fees.

The liquidation quote provides a clear understanding of what to expect financially from the liquidation process. It allows individuals or businesses to weigh the potential returns against their specific goals, financial situation, and any outstanding debts or obligations. With this information, they can make informed decisions about whether to move forward with liquidation, negotiate terms with potential buyers, or explore alternative options.

Obtaining a liquidation quote is an essential step for anyone considering liquidating assets or inventory. It provides a realistic assessment of the value that can be derived from the liquidation process, empowering individuals or businesses to make informed decisions and navigate the path ahead with confidence.

Conclusion

The costs and fees to liquidate a limited company can vary depending on the complexity of the case and the size of the company. One of the most significant costs associated with liquidating a limited company is the fees charged by the liquidator. These fees are usually calculated based on the time spent by the liquidator and their team, and they can be substantial. Other costs that may be incurred during the liquidation process include legal fees, accounting fees, and advertising costs. These fees can add up quickly, and it’s important to consider them when deciding whether to liquidate a company.

Time costs are also an important consideration, as the liquidation process can take several months or even years to complete. During this time, the company’s assets may be tied up, and there may be ongoing legal and administrative requirements that must be met. Overall, liquidating a limited company can be a costly and time-consuming process, and it’s essential to carefully consider all of the associated costs before proceeding.