- The business stops trading with immediate effect
- The employees are all made redundant
- The assets of the business are sold to pay creditors
In order to liquidate a company, a licensed insolvency practitioner will be required. It usually takes around ten days to put a company into liquidation.
Find out more…
- A Closer Look at Liquidation
- How Long Does Creditors Voluntary Liquidation Take?
- How Long Does Compulsory Liquidation Take?
- The Liquidation Process
- A Word Of Advice
A CLOSER LOOK AT LIQUIDATION
HOW LONG DOES CREDITORS VOLUNTARY LIQUIDATION TAKE?
- The majority of the company’s board sign a resolution to go into liquidation
- Shareholders are then given notice of an extraordinary general meeting to approve this decision. 75% of the shareholders that vote at that meeting will need to agree to the liquidation. Those that don’t vote don’t count
- Creditors are given notice of a separate meeting, to approve that the company will go into liquidation and to choose a liquidator. This meeting usually follows straight after the shareholders meeting on the same day
From the day the directors agree to liquidate, it takes around 14 days to put a company into creditors’ voluntary liquidation. If 90% or more of all shareholders agree to short notice, then the liquidation can happen within seven days (this is the minimum statutory notice period to creditors).
THE PURPOSE OF LIQUIDATION IS TO SELL THE ASSETS AND THEN PAY A RETURN TO CREDITORS SO THEY GET SOME OF THEIR MONEY BACK.
HOW LONG DOES IT TAKE?
- A creditor usually serves a statutory demand that gives you 21 days to pay (or 18 days to set it that demand aside).
- Once 21 days have expired the creditor can then apply to the Court for a Winding Up hearing to take place.
- Depending on how busy the Court is, it can take a few weeks to get the hearing date.
- The company to be liquidated must be given 14 days written notice of the hearing.
THE LIQUIDATION PROCESS
A WORD OF ADVICE
- It is a slower process
- There is no control after the event as to how assets are sold, and they cannot be bought back easily
- The liquidator cannot be chosen
- The government charges a 17% tax on all assets
-  CVL’s are also known as a “section 98 liquidation” as it is based around section 98 of the Insolvency Act 1986.