If your Company is suffering financial difficulties and creditor pressure is mounting it is important that you take positive action as soon as possible. Whether you are hoping to rescue some or all of your underlying business or simply want to be able to walk away in a controlled and straightforward manner, placing your Company into Creditors’ Voluntary Liquidation is usually the best course of action.
By placing your Company into Creditors’ Voluntary Liquidation, you appoint an Insolvency Practitioner of your choice. This means that you have the opportunity to speak to the Insolvency Practitioner about your Company and its financial affairs before the Liquidation process even begins and so can make sure you know exactly how the process will work and what to expect.
How the Creditors’ Voluntary Liquidation Process Works
When you contact us, we will ask you to tell us about your Company’s assets and liabilities as well as giving us an overview of how the Company’s financial situation came about and what you hope to do with the business in the future. Based on this, we will be able to tell you whether Creditors’ Voluntary Liquidation is the right process for your Company.
At this stage, we will try to give you indication of how long the process will take and how much it will cost. This will be based on the value of the assets involved, the complexity of the case and what you intend to do with the underlying business going forwards.
CVL allows you to close the Limited Company in a controlled and straightforward manner enabling you to move on free of historic debt.
If you feel that Creditors’ Voluntary Liquidation is for you, we will then let you know what we need from you to get the process started. As each case is unique, one of our Licensed Insolvency Practitioners will either arrange to meet you or will send you an email detailing exactly what we need in your case.
Once we have the required information from you, a decision date will typically be set to take place within the next 2 to 4 weeks at which point the Company formally goes into Liquidation. During this time, we will write to all of your creditors to let them know that the Liquidation is going to take place and will prepare a report outlining the financial position and explaining why the Company is being Liquidated.
Funding the Liquidation
In a Liquidation, the Liquidator’s fees and costs are payable before any funds are distributed to creditors. Because of this, we are able to draw our fees from the proceeds of any sale of assets. This means that there is no direct cost to you for our fees provided the Company still has sufficient assets for us to sell.
If the Company does not have any assets but you still want to place it into Creditors’ Voluntary Liquidation then it will fall to the Directors to pay for the Liquidation. If you are in this situation then we will always agree a fixed fee with you in advance and if possible will agree staged payments with you. You may also find that you are entitled to compensation for redundancy and loss of notice which may offset some or all of the cost.
Setting Up a New Business
Contrary to popular belief, there is no automatic restriction on being a director of a new Limited Company if you have had a Company enter Creditors’ Voluntary Liquidation. There will also be no impact of your personal credit rating providing the Liquidation does not result in any unpaid personal guarantees.
This lack of automatic restriction reflects a desire to encourage entrepreneurialism and a recognition that not all businesses succeed at the first attempt. You are therefore free to set up a new limited Company and to make an offer to buy back the previous Company’s assets. As you already know the business and its customers the assets are most often of most value to you in a successor Company and as such the Liquidator is able to sell these to you.
It should be noted that there is a restriction on reuse of Company names. This is a relatively complex restriction that requires certain steps be taken should you wish to use a similar name to that of the Liquidated Company. Our Insolvency Practitioners will explain this in detail to you should it apply in your case but please be assured that it is easily overcome with the right advice.
When you get in touch with us, you will speak directly to a licensed Insolvency Practitioner from the outset. We will take the time to understand your Company’s financial position, what your future intentions are for the business and ultimately what outcome you are hoping for.
Based on the Company’s financial position and your future goals, we can advise on whether Creditors’ Voluntary Liquidation will work for you. We can also advise on setting up a new business and on what to expect throughout the Creditors’ Voluntary Liquidation process.