Answers to frequently asked questions
The purpose of a liquidation is to close down a company in an orderly way using a liquidator. There are three types of liquidation. A Creditors’ Voluntary Liquidation, a Compulsory Liquidation and a Members’ Voluntary Liquidation.
– Creditors’ Voluntary Liquidation (CVL) – This is a liquidation of an insolvent company – generally, a company where the amount of money owed is greater than the value of assets held. This type of liquidation is started by the directors of the company and involves the shareholders and creditors.
– Compulsory Liquidation – This is also a type of liquidation for an insolvent company. However, rather than the directors starting the procedure and choosing their nominated liquidator, a creditor instead starts the process by issuing court proceedings to wind up petition in the Court and the company enters liquidation by a Court Order. The government’s liquidator (known as the “Official Receiver”) will deal with the company’s affairs.
– Members Voluntary Liquidation (MVL) – This is a liquidation for a solvent company, i.e. where the company will be able to afford to pay all of its debts. The liquidation is also started by the directors of the company and is often used when a company is no longer required, such as when the directors are planning on retiring.
A company’s shareholders place the company into liquidation by holding a shareholder’s meeting. This requires at least 75% of the members voting at the meeting. The shareholders will also pass a resolution nominating someone to act as liquidator of the company, which is usually nominated by the directors.
Following the shareholders’ meeting, a ‘decision procedure’ is held for the company’s creditors. This allows the creditors to vote for who they wish to act as the liquidator. Generally, the creditors will approve the members choice of liquidator. The creditors’ meeting is usually held 15 minutes after the shareholders’ meeting.
To allow creditors to vote, we either arrange for a ‘virtual meeting’ which will take place by conference call or we use a procedure called ‘deemed consent’. This means that unless a certain number of creditors object by a specific date, the members’ choice of liquidator will be automatically appointed. We will advise you which method we intend to use.
Engagement – Sign up though our website using our Simple 5 stage procedure. All documents are e-signed and you can arrange your payment to us by credit or debit card. From this point onwards you can direct all creditors to us. We will also advise HMRC that the company will shortly enter liquidation.
Information – You will receive an email to our secure client portal, where you will find a list of all information that we need (we will also email this list to you). You can log in to the portal at your leisure to upload the documents and information that we need.
Signing Documentation – We will provide you with the necessary paperwork to place the company into liquidation, which will be e-signed.
Meetings – We will arrange for all practical and formal steps required to place the company into liquidation.
Once the company is in liquidation, we will arrange for all matters to be dealt with promptly, such as closing the company’s bank accounts and HMRC schemes (VAT, payroll, etc) and advising creditors and others that the company has entered liquidation.
Once you have signed up we will provide a full list of information that we need. This will include information on the company’s assets, creditors, and employees. This information can be emailed, but it is quicker if you upload it through our secure client portal which we will email you a link to access.
Once you have signed up we aim to place your company into liquidation within 2 weeks. We need a certain amount of information regarding the company’s situation to prepare the paperwork for the liquidation which you will need to supply. We will be on hand throughout the process should you need any assistance with the information that needs to be supplied.
Part of a liquidator’s job is to achieve the best price possible for a company’s assets. If the company has any assets then an independent valuer will be instructed to value the assets and will then sell the assets to the highest bidder.
If the current directors offer the most then it is likely that their offer will be accepted when the value of the company’s assets is quite low, the director will generally be able to give the best offer because the costs of collecting and arranging to sell the property to a third party will mean it is not economic to take the assets away for sale, for example at an auction.
If you think that your company is solvent, you should contact us to discuss how we can assist with placing your company into members voluntary liquidation. The process is very similar and we will will offer you a very competitive fixed-price quote.
Simple Liquidation was developed specifically to allow directors a Simple and cost-effective way to liquidate their company. Directors can take control of their situation and avoid the risks associated with trading an insolvent business. The Licensed Insolvency Practitioners who will liquidate your company have over 30 years of liquidation experience between them and are regulated by the Insolvency Practitioners Association and the Institute of Chartered Accountants in England and Wales.