Company Liquidation FAQ’s

Q1. What is Company Liquidation? A: It is a formal insolvency appointment called ‘Creditor’s Voluntary Liquidation’ in accordance with the Insolvency Act 1986.rnIt is used to ‘Wind Up’ the affairs of an insolvent company which has or is likely to cease trading. Q2. Who is a Licensed Insolvency Practitioner or Liquidator? A: A Licensed Insolvency Practitioner is a professional regulated to act on the administration of insolvent companies. Jennison’s Insolvency Practitioners are authorised by the Institute of Chartered Accountants in England and Wales (ICAEW).rnA Liquidator is the name given to an Insolvency Practitioner who manages the Liquidation process. Q3. How can I start the Company Liquidation process? A: It is a voluntary process commenced by the board of directors, who hold a meeting to resolve that the company is insolvent.rnA Licensed Insolvency Practitioner will assist the directors to call a meeting of shareholders and creditors. Q4. What happens at the Shareholders and Creditors’ meetings? A: At the shareholders meeting, at least 75% of all shareholders must resolve to place the company into liquidation and a Liquidator is appointed. The company enters into liquidation at this point. rnAt the creditors’ meeting, the creditors resolve on the shareholders’ choice of Liquidator. 50% of creditors who vote by value must approve the choice of Liquidator or they may seek to appoint a different Liquidator of their choice. Q5. What happens next? rnA: The Liquidator takes control of the company and its assets. A number of reports and statutory forms are completed including a report on the director’s conduct. rnAll assets are realised for the benefit of the company’s creditors i.e. a debenture holder, preferential creditors such as employee claims, unsecured trade creditors or HMRC, with monies distributed to creditors through a dividend. Q6. Can I buy back company assets? A: Yes, the director’s can make an offer to buy back assets of a company in Liquidation. Q7. How long does the Company Liquidation process last? A: It depends on the amount of assets to sell and paperwork required, but generally between 4 – 12 months. Q8. What are my responsibilities as a director? A: Directors have a duty to both the company and to assist the Liquidator throughout the process. All books and records must be passed to the Liquidator on appointment. Q9. Can I set up another company with the same name? A: Yes, but there are certain conditions that must be fulfilled in accordance with section 216 and 217 Insolvency Act 1986. Jennison will help you through this process. Q10. Can I be appointed as a director of another company if my company is in liquidation? A: Yes. This is not a problem. Advice to Directors rnIts crucial that the financial pressures you are facing are not ignored, reacting early can help protect both your individual and business' best interests, seeking professional advice from qualified professionals can assist you in tackling your concerns and maximising the options available to you. If you would like to have a free no obligation chat with one of our advisers please call 0800 107 8788rnJennison are Business Recovery advisors providing services to small and medium sized businesses including HMRC Time to Pay schemes, Company Liquidation and general advice.