The Liquidation process itself is a path well trodden, we know we’re walking it for years! We have given some guidelines on how it works below, please bear in mind these are not cast in stone. For example pre-pack Liquidation (where all assets are sold prior to the Liquidator being appointed) will see the sale of assets happen in the Interim Liquidation period, not the Formal Liquidation period.
As we have already mentioned, Liquidation is actually divided into two sections – Interim Liquidation and Formal Liquidation. The dividing line between them is the meeting of creditors and shareholders to ratify the Liquidation.
Normally this is a time that Liquidators send out notices to creditors, but, if used wisely, Interim Liquidation is very useful to a Director. You haven’t lost complete control of your company yet, and so can tidy up any lose ends there may be.
Ethical agents will generally use this time to go through accounts, make sure there aren’t problems waiting to become a massive issue during the Formal Liquidation. If an agent does discover a problem, they will offer solutions to it and you will have to see which ones suit you best.
Assets can be disposed of prior to Liquidation in this time. This has to be done correctly, if you are using an agent then they will advise you of the correct procedure. If you aren’t then you can’t sell all the assets for £1, unless they’re actually worth £1! If in doubt get a qualified valuer in. Do not rely on the book value (the one in your accounts) this is usually wrong.
This is where pre-pack Liquidations get it’s name from, the company is ‘pre-packaged’ prior to Liquidation – very useful if you going back into business.
Meeting of Creditors
The meeting of creditors is there to ratify the appointment of a Liquidator. They will also agree the Liquidators fees. In reality these are poorly attended as creditors can discuss things with the Liquidator prior to the meeting.
Meeting of Shareholders
As the shareholders are the legal owners of the company, they also need to ratify the Liquidation, as they are going to lose their shareholding.
Your company is now in Liquidation, which leads us on to…
Any assets that have been realised (assets sold, debts called in etc) will go into the client account. This is the master account for Liquidation from which all costs, employees and creditors dividends are paid.
Sales of Assets
The assets of the company will be sold – if they haven’t been already . If there isn’t a ready buyer available, these will go to a fire-sale auction and be sold to the highest bidder.
Claim on Debtors
If anyone owes the company money, this will be chased and recovered, using the court system if necessary.
Employees tend to the innocent bystanders in a Liquidation. More often than not, they haven’t been paid for a while.
Our belief is that Liquidators should pay employees as soon as physically possible, there is no point making them suffer unduly.
In the event the client account will not be able to pay the employees what they are due, there are government funds to make up any shortfall (including redundancy payments).
Distributing the Client Account
There is a strict order for paying from the Client account.
- The Liquidator receives their fees.
- Employees receive their payments.
- Creditors get a share of what’s left.
Note – this includes HMRC – they are no longer a preferential creditor and haven’t been for a number of years – despite what John down the pub says.
How can we help
Unlike other Liquidation Companies, we have structured ourselves and our Voluntary Liquidation Services in a way that genuinely helps you the most.
By Liquidating through us, we will:-
- Ensure you are aware of any problems before you commit to Liquidation
- Make sure your Liquidation goes as smoothly as possible
- Deal with any issues before they become a problem
- Try to make sure this is your first and only Liquidation
- Minimize the pain of Voluntary Liquidation
Make a fresh start in business and start your Liquidation – call 0800 612 94 78 now.