How to Liquidate a Company

If this is the first time you have considered Liquidating your business, it must feel very worrying. So many different things to consider, concern about whether you have run the company properly and still trying to deal with creditors – but hey, that’s why we exist.

Once you have Liquidated your company the unsecured business debts are written off

To minimise the confusion and worry we will walk you though how to Liquidate a company, providing as much support as we can, explaining what is going to happen next and why it will happen – if there is ever anything you don’t understand just ask us! That’s why it’s a helpline.

Everyone talks about Liquidation as if you should know exactly how it’s done, but let’s face it why would you?

Before going into how you Liquidate a company, you need to make sure the Liquidation is actually the right path for you.

It might surprise you to know that for over 75% of enquiries we receive there are better solutions to their problem than Liquidation. Sometimes these are free, easy to implement solutions, mostly they are a darn sight cheaper than formal Liquidation, in most cases we recommend Dissolution over Liquidation.

How do you know if Liquidation is right for you?

These are a rule of thumb, you really do need to talk to us to make sure, but in essence Voluntary Liquidation is right if:

  • Have outstanding debts
  • You have an outstanding court action (bailiffs, winding up petition etc..)
  • Have not paid your employees
  • Have any legal charges against the company (debentures etc..)
Did you know that Dissolution offers a legal low cost alternative to Voluntary Liquidation?

If these don’t apply you would probably be better with an ‘informal Liquidation’ or Dissolution.

If you feel Dissolution may be an alternative to explore then have a look at our Dissolution Section here.


If Liquidation is right for you then the process is …..

First things first, you’re going to need a Liquidator.

Why do you need a Liquidator?

Well creditors tend to be a suspicious bunch (especially when they know their about to be told they aren’t getting any money), so they want someone licensed to oversee the Liquidation process.

Whether or not you use an agent or go direct to a Liquidator is up to you. Agents offer ‘value added’ services and decent ones can help avoid nasty issues coming up in the Liquidation, dealing with them before the actual Liquidator is involved.

The other benefit is that an agent can often see solutions that a Liquidator will be unaware of (they tend to be rather single minded).

If you go to the Liquidator directly then you will not have the benefit of those services.

So, what does a Liquidator actually do?

The role of the Liquidator is actually to look after the interest of the creditors, not yours (now you see why most people prefer an agent to be involved).

Quite simply their job is to get as much money in for creditors as possible. Some Liquidators will take this to an extreme and can be quite aggressive towards a Director about how they have run the business, most will be more pragmatic.

One thing to note when choosing your Liquidator, if promises are made prior to the Liquidation, get them in writing. If a Liquidator does something wrong (i.e. favour you over the creditors) they can lose their license, which means their career has gone down then toilet. This does mean they can ‘forget’ what was promised earlier.

We are seeing more and more people calling in for advice on how to handle Liquidators that have been less than genuine about their approach to Liquidation.  Remember to get everything in writing – if they won’t write it down they will probably have a change of heart.

Any assets the company has (debtors, stock etc) needs to be turned into cash (crystallised if you prefer the accountants phrasing).

The proceeds from this going into an account designated for the Liquidation (a Client account).

To ratify the Liquidation a meeting of creditors is held. These are generally unattended, let’s face it would you waste your time going to a meeting you weren’t going to get any money from?

There is also a shareholders meeting, where they will agree to close the company.

Now the company is in Liquidation.

What happens next?

You may well have heard of horror stories about what happens to a Director once they have liquidated their company. Most of these are exaggerated.

The Liquidator can now take their fees from the client account, if there are staff payments due, these will also be paid.

The Liquidator now has a statuary duty to conduct an investigation into thy the company failed - despite what anyone says they will do this.

Handling problems in Liquidation.

If you have gone direct to a Liquidator, then you need to talk sensibly to them about solutions to any issues they come across, obviously if you have an agent they should have dealt with all of this prior  to the Liquidators involvement.

Most Liquidators will be quite happy to talk to you about the problems and come to a sensible arrangement that suits everyone.

If you are handling the negotiations yourself, the key to success it to remember that the Liquidator is there to get as much money for the creditors as possible. As an extreme example: there is no point bankrupting someone over an over-drawn loan account, if you are not going to get any more money. It just costs the Liquidator money to do it, for absolutely no benefit to the creditors.

Most Liquidations will go relatively smoothly.

We know it’s probably a habit but don’t treat the Liquidator as you have creditors. If there is a problem, and you know your bang to rights, just hold your hands up, and start discussing solutions.

Like they say if you have dug yourself into a hole, the first thing you need to do is stop digging!  This is your chance to put your shovel down and pick up a ladder.


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.