Directors of Limited Companies cannot liquidate their own company in the UK, to place a company into liquidation you need to be a licensed insolvency practitioner.
Licensed insolvency practitioners are regulated by several governing bodies, as they are governed by professional standards, they must ensure that they have professional indemnity insurance and bonds to ensure that these standards are maintained.
Although the process of liquidating a company is relatively straightforward process to insolvency professionals, there are a number of legal and financial complexities that can make it challenging. For example, you’ll need to ensure that all of your debts are paid off and that your assets are distributed fairly.
You’ll also need to navigate the tax implications of liquidating your business. As a result, it’s often wise to seek professional help when liquidating a company. An experienced business lawyer or insolvency practitioner can assist you in ensuring that the process goes smoothly and that all of your legal obligations are met.
How can I quickly get my company liquidated?
To ensure that your company is liquidated quickly directors need to ensure that the business is viable or not, this will decide what type of quick liquidation is needed for the company.
Here are the 5 steps you need complete to ensure you can speed up the process:
Step 1: Find a Liquidator, the first step is to find a liquidator that you can work with and instruct them to act on your behalf. As we have several insolvency practitioners across the UK, we are happy to have a chat about your company’s viability.
Step 2: If the business is no longer viable and a creditors voluntary liquidation is required then the Issuing of legal paperwork needs to take place, we will issue notices for signing by company directors and shareholders. These notices are legal documents that pass over responsibility of the company to a liquidator. The notices are also filed at Companies House to let the register know the company is liquidated and a notice is placed within the London Gazette. The also include an engagement letter which will clearly state the responsibilities of the insolvency practitioner and what you can and cannot expect from their services.
Step 3: In the notices pack which you will receive is a creditors schedule, this is a list of creditors e.g., people who the business owes money to. The liquidator will need this list as they will need to write to the businesses or individuals and let them know that company is no longer viable and entering an insolvency process. When they write to your creditors will let them know there is to be a meeting of creditors to be held on a set date and time.
Step 4: The liquidator will hold a meeting of creditors and a director will be asked to chair the meeting, the liquidator will run the meeting. The creditors meetings are held online or via telephone as physical meetings are no longer mandatory. It is a legal requirement that a director attends this meeting. Dependent on the how many people opt to dial in or attend the meeting, the time required for the meeting can last from 15 minutes to several hours at this point the company is placed into liquidation.
Step 5: Now the creditors meeting has been held all that is let is for the director or directors of the company is to ensure that they give the liquidator all the company’s information and books and records. This information will assist to comply reports for creditors annually if the case is left open. This is an important part of the process and will ensure that the directors are complying with the liquidator. At this point your legal duty of running the business ends.
What happens after I have liquidated my company?
Once a company has been formally liquidated it will be removed from the register of companies held at Companies House. The company will cease to exist as a legal entity.
As long as the appointed insolvency practitioner does not have any concerns regarding the conduct of the company’s directors in the time leading up to it becoming insolvent, they will not face any penalty or further action regarding the company’s liquidation.
Directors will also not be held personally liable for any outstanding company debt, unless they have offered security via a personal guarantee.
Following the liquidation of their company, directors are allowed to set up another company providing they have not been subject to a disqualification order. If you are planning on incorporating a new limited company after the CVL process has completed, you should seek the advice of your insolvency practitioner beforehand, particularly if you are planning to continue operating within the same industry.
There are a number of rules that with a new company especially so-called ‘phoenix companies, seeking expert advice can ensure you stay within the rules, protecting yourself, your creditors, and your company.
There could be several reasons why it is not possible to liquidate your own company. One of the primary reasons could be the existence of outstanding debts or liabilities that need to be settled before the liquidation process can begin. Another reason could be the presence of legal or contractual obligations that need to be fulfilled, such as contracts with suppliers, employees or customers.
Additionally, there may be regulatory or legal restrictions on the liquidation of a company, such as requirements for a minimum notice period or the need for approval from a court or regulatory body. Furthermore, if the company is a part of a larger group, there may be constraints on the ability to liquidate a subsidiary due to its impact on the wider group structure. Thus, there could be various factors that may prevent you from liquidating your own company.
Require further help
As you can see from the steps above there are a number of processes that are required to close a company.
This list is only a quick outline as it will give a brief guide of who to close a Limited Company should you feel the business is no longer viable and needs to be placed into liquidation.
Feel free to contact us to discuss your options regarding liquidating your own company today.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.