How to liquidate a limited company

Liquidate your limited companyLiquidating a limited company is the process of closing down the company and distributing its assets to its creditors and shareholders. This is usually done when a company is no longer financially viable and cannot continue to operate. The process can be initiated by the directors or by the shareholders through a resolution.

The first step in liquidating a limited company is to appoint a liquidator, who is responsible for overseeing the liquidation process. The liquidator will then collect and sell the company’s assets, such as property, stock, and equipment, and use the proceeds to pay off the company’s debts and creditors.

Any remaining assets will then be distributed among the shareholders, in accordance with the company’s articles of association and the Companies Act.

It is important to note that limited company liquidation can have serious financial and legal consequences, and it is recommended that professional advice be sought to ensure the process is carried out correctly.

Liquidate your limited company

If you need to carry out a company liquidation, the first step is to hold a meeting of the directors to determine if liquidation is the best course of action. If it is, then a resolution must be passed to begin the process. Next, a liquidator must be appointed, who will be responsible for overseeing the liquidation process.

The liquidator will then collect and sell the company’s assets, such as property, stock, and equipment, and use the proceeds to pay off the company’s debts and creditors. Any remaining assets will then be distributed among the shareholders. It is important to comply with all legal and financial requirements during the liquidation process, including filing the necessary documents with the Companies House and complying with tax laws. It is advisable to seek professional advice to ensure the liquidation process is carried out correctly

There are 3 types of company liquidation:

Here are the three different types of company liquidation:

  • creditors’ liquidation – When you liquidate your firm because it is unable to pay its debts, you involve your creditors.
  • compulsory liquidation – You want the court to liquidate your company because it is unable to pay its debts.
  • members’ voluntary liquidation – You wish to close your business even though it can pay its bills

Arrange liquidation with your creditors

The process of limited company liquidation, also known as winding up, can be initiated by a director if certain conditions are met.

This includes:

  • The company being unable to pay its debts and being considered insolvent.
  • Enough shareholders must agree to the proposal for the company to stop trading and be liquidated.

Get shareholders’ agreement

The following steps must be taken to initiate the winding up of a company:

  1. Hold a meeting of shareholders and request a vote.
  2. Obtain agreement from at least 75% of shareholders, based on the value of shares, to pass a winding-up resolution.
  3. Complete the following three steps once the resolution has been passed: a. Appoint an authorized insolvency practitioner as liquidator to oversee the liquidation process. This can be done by searching online. b. Submit the resolution to Companies House within 15 days. c. Publish the resolution in The Gazette within 14 days.

Apply directly to the court

Compulsory liquidation procedure can be initiated by a director through a court order to cease trading and wind up the company. The following criteria must be met:

  1. The company is unable to pay debts of £750 or more.
  2. At least 75% of shareholders, based on the value of shares, agree to allow the court to initiate the winding up process.
  3. The company must primarily conduct its business within England, Scotland, or Wales.

Note: The location of the company’s headquarters is not relevant, as long as the majority of its business is conducted within England, Scotland, and Wales.

How to apply

To initiate compulsory liquidation through a court order, the following steps must be taken:

  1. Fill out a winding-up petition form (Form Comp 1) and send it to the court along with: a. Form Comp 2, which confirms the details of your petition. b. The winding-up resolution from the shareholders.
  2. Determine where to send the petition based on the company’s paid-up share capital, which can be found on the Companies House register. a. If the paid-up share capital is £120,000 or more, submit the petition online to the High Court. b. If the paid-up share capital is less than £120,000, find the nearest court that deals with bankruptcy and submit the petition there.
  3. If the court is one of the following, the petition can be submitted online: a. Admiralty and Commercial Court b. Chancery Division c. Companies Court d. High Court (including Bankruptcy Court) e. London Mercantile Court f. Rolls Building If it is another court, the petition must be submitted by post.


It costs:

  • £2,600 to submit the petition
  • £280 for the court hearing

After you apply

After applying for compulsory liquidation, the following steps must be taken:

  1. Receive a date for the hearing if the court accepts your petition.
  2. Before the court hearing: a. Serve a copy of the petition to the company and fill out a certificate of service to inform the court. b. Advertise the hearing in The Gazette at least 7 days prior to the hearing. c. Send a copy of the advert and the certificate of service to the court.
  3. Attend the court hearing, either in person or through a solicitor. No evidence is required to be presented.
  4. If the court grants the winding-up order, an official receiver will be appointed to oversee the liquidation process and a copy of the order will be sent to the company’s registered office.

Liquidate a company you do not want to run anymore

To opt for a solvent liquidation such as the members’ voluntary liquidation process, your company needs to be financially sound and meet one of the following criteria:

  • Retirement plans for the director
  • Transition of the family business to someone else
  • Ceasing business operations

To initiate the members’ voluntary liquidation process, the following steps must be followed:

  • Submit a “Declaration of Solvency” for companies in England and Wales
  • Acquire form 4.25 from Accountant in Bankruptcy for companies in Scotland

Before proceeding with the declaration, it is crucial to assess the company’s assets and liabilities.

Make a declaration of solvency

In order to complete the liquidation process, prepare a statement declaring the belief of the directors that the company has the capacity to pay its debts along with interest at the official rate. This statement should include:

  1. The company name and its official address.
  2. The names and addresses of all directors associated with the company.
  3. The expected timeline for paying off the debts, which should not exceed 12 months from the date of liquidation.
  4. A comprehensive statement outlining the assets and liabilities of the company.

After you’ve signed the declaration or form

There are 5 steps to follow for members’ voluntary liquidation:

  1. Sign the declaration of solvency or form 4.25 (Scot) – This document must be signed by a majority of the company’s directors in the presence of a solicitor or notary public.
  2. Convene a general meeting with shareholders within 5 weeks and pass a resolution for voluntary winding-up.
  3. At the meeting, appoint an authorized insolvency practitioner as the liquidator who will be responsible for winding up the company. You can find an insolvency practitioner online.
  4. Advertise the resolution in The Gazette within 14 days.
  5. Send the signed declaration to Companies House or form 4.25 (Scot) to the Accountant in Bankruptcy (for Scottish companies) within 15 days of passing the resolution.

Address for Companies House: Crown Way Cardiff CF14 3UZ

What the liquidator does

The liquidator is an authorised insolvency practitioner or official receiver who runs the liquidation process.

As soon as the liquidator is appointed, they’ll take control of the business.

They will:

  • settle any legal disputes or outstanding contracts
  • sell off the company’s assets and use any money to pay creditors
  • meet deadlines for paperwork and keep authorities informed
  • pay liquidation costs and the final VAT bill
  • keep creditors informed and involve them in decisions where necessary
  • make payments to creditors
  • interview the directors and report on what went wrong in the business
  • get the company removed from the companies register

In a creditors’ voluntary liquidation, the liquidator acts in the interest of the creditors not the directors

What happens to directors

When a liquidator is assigned, the directors are no longer:

  • have any authority over the company and its possessions
  • the ability to represent the company in any capacity

It is the responsibility of the directors to:

  • provide the liquidator with all relevant information regarding the company surrender all assets, documentation, and records related to the company
  • cooperate with the liquidator by agreeing to any interviews they may request
  • Noncompliance with these obligations may result in a director being disqualified from holding such a position for a period of 2 to 15 years, or facing prosecution for unbecoming conduct.

Re-using company names

If you were a director of a company that went through compulsory liquidation or creditors’ voluntary liquidation, you will be restricted from forming, managing, or promoting any business with the same or similar name as the liquidated company for a period of 5 years. This ban applies to both the registered name of the company and any trading names it had.

There are only a few exceptions to this ban, including:

  • If the business is sold by a licensed insolvency practitioner, and the required notice is given.
  • If you obtain the court’s permission to use the name.
  • If you are involved with another company that has been using the same name as the liquidated company for at least a year.

Read the guidance on re-using company names.

Access to your bank account

When a petition to wind up a company is filed, the company’s bank account will be frozen and in order to access it, a validation order is required.

How to apply for a validation order

When seeking access to your company’s frozen bank account, the following steps should be taken:

Notify the respondent who filed the winding-up petition of your intention to apply for a validation order, including the court you plan to apply to (typically the Companies Court) and the date you plan to do so.

Complete Form IAA and write a supporting witness statement. Then, submit both the form and statement to the court.

Be prepared to pay a fee of £155.

What happens after you apply

During the hearing process for a validation order, you will have the opportunity to present your case to a registrar or district judge. The respondent may also present their argument if they object to your application.

Based on the evidence presented, the court will then make a decision. If your application is successful, you will receive a written copy of the validation order, which must be provided to the bank in order to access your company’s frozen bank account.

However, if you are dissatisfied with the court’s decision, you may have the option to appeal to the Chancery Division of the High Court.

Frequently asked questions

What happens if you liquidate a Ltd company?

If you liquidate a Ltd company, the company will stop doing business and employing people. The company will not exist once it's been removed ('struck off') from the companies register at Companies House. When you liquidate a company, its assets are used to pay off its debts. Any money left goes to shareholders.

Does it cost money to liquidate a company?

Yes, it costs money to liquidate a company, the cost of liquidating a company all depends on the size of the company and the complexity of the case. This is based on factors such as the company's overall financial situation, the number of creditors and shareholders, as well as the value of its assets.

Can I just close my limited company?

Yes, you can close down your limited company by getting it 'struck off' the Companies Register. This is also known as 'dissolving' your company. You can only strike off your company if it: has not traded or sold off any stock in the last 3 months.


Liquidating a limited company involves the process of dissolving and winding up the business. This is typically done when the company is no longer viable, such as when it is facing financial difficulties and can no longer pay its debts. During the liquidation process, a liquidator is appointed to oversee the process, who takes control of the company’s assets and liabilities.

The process of liquidating a limited company can be complex and may take several months to complete, but it provides a formal means of resolving the company’s affairs and resolving any outstanding debts.

If you need help liquidating your limited company simply complete the online enquiry form and we can talk you though your options.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

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.