Why is DIY The Wrong Way To Liquidate Your Company? - The legalities aside, It's a huge risk to take...
If your business becomes insolvent then you are faced with a number of options, many directors will opt for Voluntary Liquidation, this is why.
Voluntary Liquidation is a when a company takes it upon themselves to use an Insolvency Practitioner to start Liquidating their company. If you are a director of a limited company you, and any partners or shareholders, can opt to liquidate your company when things are getting difficult. The reason many directors choose to go down the route of Voluntary Liquidation is because it gives directors the opportunity to start afresh you can also buy the assets off the old company for the new business. You can also let unsecured loans or debts die with the company as you are only required to pay secured loans and those you have given a directors guarantee for. By liquidating your company yourself you control the process much better, rather than creditors liquidation where your creditors push you into liquidation to recoup money owed. You can choose your own liquidator, in most cases, and the sale of the assets are used to pay back creditors.
How do you Liquidate your company?
To liquidate your company there are a number of steps:
1 – Get in touch with a Liquidator, this should be a licensed Insolvency Practitioner, tell them you want to Liquidate your company. If you get in touch with us we will look through all your options and make sure Liquidation is the best option for you, there may be other solutions you did not know about. If it is then we will make a start on the next steps.
2 – To start the Liquidation your insolvency practitioner will need:
- List of creditors (with address etc.. please)
- Money laundering ID
- List of any assets for valuation
- Backup of your books
- Any employee records
3 – Your Insolvency Practitioner (IP) will write to your creditors, informing them of your situation and that you are liquidating the company. We try to contact them quickly, within the first 2 days after you have made your decision and informed us. Most creditors will leave you alone, they will deal with us (or your IP) about payments and recouping money, if they do get in contact with you we advise you to pass them onto us.
4 – Your company assets will be valued and sold. You can buy these assets yourself if you want as an individual or new company, if they cannot be sold then they will be auctioned.
5 – Creditors Meeting. Your creditors will be invited to a creditors meeting, many will not come, or will have an appointed solicitor or accountant (this is often the case with large companies and banks if you owe a lot of money) this is your last meeting as a director of this company. Once your company has been liquidated and is formally closed, your balance debts will be written off, if you have any personal guarantees then you will need to arrange for these to be paid personally. If you want to set up a new business then you can, many people do and use the experience as a learning curve to build a better business.