WHY PUT YOUR COMPANY INTO LIQUIDATION?
Reasons for liquidation include:
- You cannot pay your debts as they fall due.
- Your liabilities exceed your assets.
- You are making losses and you don’t think you can turn the situation around.
- You are finding it hard to cope with the stress and pressure of trading.
- You are worried that trading is in decline and you will be liable for wrongful trading if you carry on.
- Someone else will deal with the creditors and all their claims.
- Employees owed redundancy, unpaid salary or holiday pay and notice pay can claim this from the government RPO fund. Directors can usually claim as well.
Reasons against liquidation include:
- The business can pay off all its debts within a short period of time.
- The business may be insolvent, but has a value to someone else so should be sold first.
- If you are a director or shadow director with a poor compliance history or you have been disqualified as a director you should very carefully consider your options. You may be committing a criminal offence.
- A Company Voluntary Arrangement or pre-pack administration may be better options.
- You can raise the money to pay off all the debts and do not want the stigma of having been the director of a liquidated company.
A WORD OF ADVICE
Insolvency is a legal mind field. If you are in doubt seek good legal advice from a qualified and experienced solicitor who specialises in insolvency or a licensed insolvency practitioner like our firm. Avoid unlicensed debt advisors whose incentive may not necessarily be to help you.