Simple Liquidation

When a business is suffering from debts they cannot honour and creditors are demanding payment, the directors of the business are often in the position of having to consider liquidating the company. In some cases, creditors will have petitioned the court and for        ced the company into compulsory liquidation. However, if it hasn’t got that far, there is the option of a Creditors Voluntary Liquidation, or CVL. A CVL is a formal insolvency process; the directors voluntarily choose to cease trading and wind up the insolvent company. Whilst no company director wants to be in this position, it is often the best course of action for all parties. So, how does a Creditors Voluntary Liquidation work and in what way does it affect the business?

There are about 1,600 licensed insolvency practitioners (IPs) in the UK; that doesn’t include the support staff in the background that assist the UK’s IP in providing comprehensive, professional and highly-experienced insolvency practitioner services for businesses across the country. But IPs don’t just deal with liquidating companies; they are also business recovery professionals, i.e. helping to rescue businesses that are struggling with debt. Liquidation is not always the only option for an insolvent company. If an IP is called in early enough, it is possible to rescue the company from closing using other formal insolvency procedures – administration, receivership and company voluntary arrangements (CVAs). What is an insolvency practitioner? Firstly, let’s quickly explain  what an insolvency practitioner is – an IP is a qualified, licensed and authorised practitioner that acts on behalf of an insolvent (or solvent in some cases) company in either liquidating the business, i.e. c...

As of 2021, there are around 1,600 licensed insolvency practitioners (IPs) in the UK; that doesn’t include the thousands of support staff in the background that help every single one of the UK’s IP in providing comprehensive, professional and highly-experienced insolvency practitioner services for businesses and individuals across the country.  But what is involved in delivering insolvency practitioner services and exactly what services do IPs provide? Let’s take a deeper look into the role of an IP. What is an insolvency practitioner? Let’s start with an explanation of  what an insolvency practitioner is  – it is someone that is qualified, licensed and authorised to act on behalf of a person, partnership or company that is either insolvent, as well as a solvent company. Insolvency practitioners generally work within a law firm, an accountant or a specialist insolvency practice. To practice as an IP, they must: Have passed the relevant insolvency, or  JEIB  (Joi...

The voluntary administration process is one of the most effective tools for the directors of companies in financial distress to protect their positions. It can help the company to prevent itself from overwhelming pressure from creditors chasing you to pay debts. In the UK, if you want to use this process to save your business, you have to file a notice stating your intention to appoint an administrator. Directors of the company can use this process as a tool to evade any legal action by the creditors if it is suffering from a financial crisis. An administrator is appointed by the company to formulate the restructuring plan by taking over the complete control of the business from its directors. The administrator can put the company assets for complete or partial sale depending on the arrangement he makes to pay the debts of the creditors. How administration works Once the directors of a company appoint an administrator, it is his responsibility to notify the creditors and Companies Hou...

The year 2020 is definitely the annus horribilis for many businesses throughout the UK. From the national lockdown in March and on to the current day, there are very few businesses that have not been adversely affected by the coronavirus pandemic. Licensed insolvency practitioners have never been so busy.   Businesses across all industries are struggling to stay open. Seeking the advice of an  insolvency practitioner  does not necessarily mean that the company is about to enter administration or be in the position of progressing to liquidation. In fact, it is better to seek help from an insolvency practitioner sooner rather than later as there is a range of  corporate recovery services  to consider which may also be viable options. What is corporate recovery? Before we look at the various  corporate recovery strategies  that could potentially rescue the business, let’s understand what corporate recovery means. From the moment you contact a licensed ins...

Whether a company is solvent or insolvent, it is not possible to liquidate a company yourself. Any company liquidation must be handled by a licensed insolvency practitioner (IP).  Unless the company has been issued with a winding up petition by a creditor, the directors of the company make the decision to liquidate it and instruct an IP. So, let’s look at how to liquidate a company. Types of company liquidation There are three types of company liquidation in the UK: Compulsory liquidation Creditors’ Voluntary Liquidation Members’ Voluntary Liquidation With a compulsory liquidation, an insolvent company has been forced to liquidate by their creditors. In a Creditors’ Voluntary Liquidation (CVL), the directors have made the conscious decision to liquidate an insolvent company. For a Members’ Voluntary Liquidation (MVL), the directors have made the decision to close a solvent company. Can I liquidate a company myself? In the UK, you are not allowed to liquidate a company yourself. The...