You may have decided that it’s time to windup or liquidate your business and to stop your business trading.
A variety of circumstances may lead to this, not least is where you may have just had enough and can’t actually sell the company as a going concern. Also, there may be a problem with looming insolvency. Beginning the liquidation process means that the company will stop trading, you will no longer employ your staff and your business will be taken off the company register with Companies House. Once the business is liquidated, everything belonging to the business will be sold off to pay any debts owed and anything left over will be distributed amongst its shareholders. Where you decide to liquidate your business this is called voluntary liquidation and there are two types: Creditors’ voluntary liquidation and members’ voluntary liquidation
Creditors’ voluntary liquidation
The first is creditors’ voluntary liquidation and this is where you and the other shareholders in the business decide to liquidate the business because there is not enough money to pay the debts owed and the business is therefore insolvent. You and your shareholders need to vote and pass a ‘winding-up resolution’. You must have agreement of 75% of your shareholders in order to the wind up the business. After you have passed the winding-up resolution, you must appoint an insolvency practitioner who is authorised to liquidate the business. Then you must notify Companies House of the winding-up resolution within 15 days of passing it and finally put the resolution in The Gazette, an official public record that lists all insolvencies. You must hold a meeting with your creditors within 14 days of making the winding-up resolution. It must be advertised in The Gazette and you must have in attendants another director, the company secretary and the liquidator.
Members’ voluntary liquidation
The second is members’ voluntary liquidation, where your debts are covered but you still want to close the business. In order to do this, you need to fill in a form to declare your solvency and have this signed by a majority of your directors. After completing these steps, you must hold a general meeting at least 5 weeks after and get the directors to make a resolution to support the voluntary winding up. Finally, put an insolvency practitioner in place who will wind up the business for you and send Companies House your signed form.
These are not the only circumstances where your business may be liquidated. If you cannot meet your liabilities, one of your creditors may apply to the court for a winding up order and your business may be placed under a compulsory insolvency order.
Whatever the circumstances of your insolvency, talk to an experienced practitioner about your options before making any decisions. If you want to liquidate your business you can discuss looming insolvency issues or the voluntary winding up of your company with our experienced team at Berley on 020 7636 9094 and we’ll be happy to help. Otherwise, you can email us on email@example.com or complete our Free Online Enquiry and we’ll be happy to help you.