Liquidation is the last resort for any company and often, but not always, signifies the cessation of trade of the business. In a liquidation situation, the insolvency practitioner (referred to as the Liquidator) aims to maximise the realisation of the company’s assets so that funds realeased can be distributed amongst the company’s creditors, with secured and preferential claimants ranking in priority to unsecured creditors.
A liquidation can be instigated by the office holder during another insolvency process, such as Administration or a Company Voluntary Arrangement or may be initiated in the following ways:
Creditors’ Voluntary Liquidation
In this situation, the directors of the company pass a resolution to wind up the company. Meetings of creditors and shareholders are subsequently held to place the company into liquidation and to appoint a liquidator.
This is when a petition is presented to Court at which a winding up order is made against the company. This process is most often instigated by a company creditor and is a more time consuming and costly route into liquidation than the Creditors’ Voluntary approach. However, in certain circumstances, this is the best way forward.
Once appointed, the Liquidator takes control of the affairs of the company through to the point of dissolution.
Members’ Voluntary Liquidations
If your company is solvent but you wish to cease trading and distribute assets to shareholders then you might want to consider Members’ Voluntary Liquidation. This process can offer protection and an orderly wind down. At UHY Hacker Young we have extensive experience dealing with group simplification and assisting organisations in dissolving dormant companies as well as making their group structure more transparent and reducing operating costs.
See what our clients say about us.
The next step
If you think your business may be at risk of insolvency we can help. Please get in touch so we can discuss the best way forward.