Simple Liquidation

Currently, there are approximately 1,600 licensed insolvency practitioners (IPs) licensed and registered in the UK. The majority of IPs work for legal or accountancy firms, or for a dedicated business recovery and insolvency practice. The role of an insolvency practitioner involves more than just liquidating solvent and insolvent companies. They are also very much involved in business recovery and insolvency rescue plans. With predictions of corporate insolvencies being much higher in the first two quarters of 2021 due to the coronavirus pandemic – some are saying a potential 60% increase over the global financial crisis of 2009 – IPs are in demand. To help, the Government recently announced extensions to certain measures that are aimed at protecting directors and their companies who have been impacted by COVID-19.

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...