How do I place my company into a creditors voluntary liquidation?
The resolution to place a company into voluntary liquidation will be voted upon at an extraordinary general meeting of shareholders. This meeting is usually convened by the board of directors upon their instruction of an insolvency practitioner to assist them with the process. The insolvency practitioner will ensure that adequate notice is provided to all shareholders and that a quorum is in attendance pursuant to the company’s memorandum and articles of association. We will also assist the directors in preparing a statement of affairs and a report containing various information that must be presented to creditors prior to the appointment of a liquidator.
Not all the directors/shareholders agree to a Creditors Voluntary Liquidation process – can it still happen?
Yes. The board of directors will usually be the ones who decide to take steps to place the company into liquidation. The requisite voting majority will be set out in the company’s memorandum and articles of association, but is typically a simple majority.
At the members meeting, the shareholders will be asked to vote upon a special resolution. This means that at least 75% of the votes received at the meeting must be in favour of the liquidation. If this is not achievable but action needs to be taken to place the company into an insolvency process, you may need to consider a Compulsory Winding-Up or Administration. We can advise you on the appropriate steps to take.
What if my creditor’s object to the liquidation?
As above, the decision to place a company into voluntary liquidation is that of the shareholders. Creditors will have to be notified of the proposed liquidation and they are given the opportunity to nominate an alternate insolvency practitioner if they do not agree to the appointment of the members’ nominated liquidator. This rarely happens in practice.
Can I set up a new company and re-use the company name?
Yes, but only if the proper procedure is followed. Section 216 of the Insolvency Act 1986 prohibits the re-use of a company name following the liquidation. There are however exceptions to the rule and a due process to be followed that would allow a former director to re-use the same or similar name.
Are the directors restricted from acting as directors again if they liquidate?
No, a director is not automatically restricted from acting as a director again if he/she decides to liquidate their company. An insolvency practitioner has the duty to investigate the financial affairs and transactions of an insolvent company, including the conduct of the directors. A confidential report will be made to the Department for Business, Energy and Industrial Strategy (DBEIS) regarding the conduct of each director (or shadow director) who was in office during a 3 year period leading up to the insolvency. If the DBEIS have concerns they will liaise with the insolvency practitioner and the concerned director to discuss the issues raised. The DBEIS have the power to apply to Court for an order disqualifying a former director from being involved in the management, promotion or formation of another company for a period of 2-15 years. This only usually applies in the most serious cases. We always advise that if you have concerns regarding the impact on you personally from an insolvency event that you call us for some FREE, no obligation advice.
How much does it cost to place a company into liquidation?
The costs of assisting the directors in taking steps to place the company into liquidation will be agreed at the outset of our instruction. Myliquidation.co.uk makes is easier than ever to obtain a quote to place your company into liquidation. If the company has assets, we often use the proceeds from the sale of assets to meet these costs. We only ever ask the directors to make a contribution towards our costs if a company has no assets, or the realisable value is insufficient to cover our agreed costs. If you have been asked to pay these costs yourself, regardless of the company’s asset position please contact us for a competing quote.
What happens to employees?
Typically, when a decision is made to take steps in placing a company into liquidation, the company will cease trading immediately. We will then assist you in dismissing your employees and informing them of their statutory rights. Any claims employees may have for arrears of wages, holiday pay, compensatory payment in lieu of notice and statutory redundancy will be administered by the Redundancy Payments Service and we will guide the employees on how to lodge claims. Any claims over and above the statutory limits will rank as a creditor claim in the liquidation.
Can I buy back assets from my company’s liquidation?
Yes. It is common for company directors to attempt to ‘start over’ and incorporate a new entity. Often in order to achieve this, the directors will express an interest in purchasing the assets back from the insolvent entity. We will always instruct a RICS accredited agent to assist us with the disposal of assets to ensure the best possible price is being achieved for the benefit of creditors.
