Thinking About Liquidating Your Company?
There are several reasons why a business may need to be liquidated. Perhaps you are struggling to pay your debts, or are looking for a tax-efficient way to exit your company. Whatever your circumstances, you can rely on Inquesta to assist.
What is Liquidation?
Liquidation is the formal procedure of closing down a business and liquidating its assets to raise money. Typically, the proceeds of this will be used to pay off the company’s creditors with any remaining funds being distributed amongst shareholders. A liquidator is appointed (either by the business owners themselves or the courts) to oversee the entire process.
The main purpose of a liquidator is to raise as much money from the firm’s assets as possible. This is done by carrying out an appraisal and selling them at full market value. The liquidator will also try to call in all debts that are owed to the company.
Understanding Business Solvency
A company is deemed to be insolvent if it becomes unable to satisfy its debts as they fall due, or its assets are worth less than its liabilities. If the problem is spotted early enough, it may be possible to turn around the firm’s fortunes and stage a recovery.
Getting a clear understanding of whether or not your business is solvent is crucial. Trading while insolvent carries significant penalties, so it is essential to know where you stand. If you are found to be insolvent, you must stop trading immediately.
Working with a licensed insolvency practitioner, such as Inquesta, will ensure you are completely aware of your firm’s circumstances and the options available. We will be with you every step of the way.
Is Your Company Solvent?
If you’re ever unsure about the solvency of your company, there are a few warning signs to watch out for:
You continuously struggle to pay bills when they fall due
Your company’s assets (including money in the bank) are worth less than what you owe
You have started to receive enforcement notices from creditors — such as winding up petitions or statutory demands
Should any of the above apply to you, it is important to seek help as soon as possible to figure out your options.
Types of Liquidation
There are several ways of liquidating a company. Deciding which option is best for you depends entirely on the circumstances of your business and whether or not it is solvent.
Insolvent Liquidation
Should your business be insolvent, there are two ways it can be shut down. These are:
- Creditors’ Voluntary Liquidation (CVL)
- Compulsory Liquidation
As the names suggest, whichever method is chosen depends on whether the liquidation is carried out voluntarily or not. A CVL is used when a business decides to close its doors because it is unable to satisfy its debts and there is no hope of recovery.
Meanwhile, a compulsory liquidation occurs when the firm’s creditors petition the courts to close it down via a Winding Up Order. This leads to the business owners losing control of the situation and could result in an investigation into their conduct.
Solvent Liquidation
If you are looking to close a solvent business, this can be done using the following methods:
- Members’ Voluntary Liquidation (MVL)
- Striking Off
Deciding which option is best depends entirely on the circumstances of your business. While striking off is often cheaper, it could result in extra legal fees for extremely complex cases. You also must not have traded in the last three months, or have any creditor agreements.
A MVL can be particularly useful if the company has high-value assets such as property, as it is considered to be extremely tax-efficient. However, it requires a legal guarantee that the business is solvent and can pay all of its debts.
Why Work With Inquesta
As a licensed insolvency practitioner and business recovery specialist, Inquesta is able to offer a holistic service that is difficult to match. Over the years, we have helped company directors from all areas of industry to liquidate their business in the most hassle-free way possible. Whatever your circumstances, you can rely on us to assist.
From the outset, we will place the needs of our clients at the forefront of everything we do. This is especially important when it comes to insolvent companies, as being in financial difficulty is often an incredibly stressful time. We will work tirelessly to achieve the best result, and can take care of the entire process on your behalf.
Meet the Team
Steven Wiseglass
Director of Insolvency
A co-founder of Inquesta, Steven is a licensed Insolvency Practitioner with over a decade of experience in the field. He is a member of the Insolvency Practitioners Association, Association of Business Recovery Professionals (R3), and his insolvency licence is issued by the Insolvency Practitioners Association. In addition, he sits on the R3 committees of the North West Regional Committee.
Here to Help You
If you’re looking for specialist advice about how to liquidate your company, the Inquesta team is here to help. Contact our expert team today using the options below.