How To Liquidate a Company

If you’re looking how to liquidate then the first step is to be clear on whether your company is solvent or not. There are two main tests for this – first whether you have the capacity to pay your bills and fulfil your obligations from the company finances and, second, whether you have enough assets to address your liabilities. In other words can you pay what you should pay, when it should be paid and is the value of  money owing to the company along what it owns enough to pay what the company owes out.

The answer to these questions will depend on how you put a company into liquidation. Whether you are solvent or not, it pays to get the advice and guidance of a licenced insolvency practitioner from the outset. At liquidation.co.uk, we have three licensed individuals backed up by a highly qualified support team. Our aim is to provide low cost liquidation advice and guidance to businesses that need to go down this route.

There are two main ways in which you can start liquidating a company:

Members’ Voluntary Liquidation or MVL

This is the process for businesses that are solvent and is suitable for those which have over £25,000 in shareholder reserves. Opting for an MVL to wind up a company has tax benefits because these reserves will be treated as capital receipts and as such be subject to lower tax, the shareholders may also benefit from Entrepreneurs’ Relief which may further cut the rate of tax payable by the shareholders of the company.

There are 5 key stages to an MVL process:

  • Directors Meeting
  • Declaration of Solvency
  • General Meeting of Shareholders
  • Distribution of Funds
  • Final Meeting

Creditors’ Voluntary Liquidation or CVL

If you have determined that you are insolvent and not able to meet your liabilities, CVL is the preferred option for liquidating a company. This is a director-led process and can either be used to fully liquidate a company or find a rescue strategy that, for instance, allows the director to purchase the goodwill and assets of the business to begin trading within a new company.

An appointed licenced liquidator will be responsible for selling assets to contribute to any financial liabilities, including obtaining independent valuations to ensure that the value of any assets sold are fair to all parties.

Next Steps

If you want to know how to put a company into liquidation, we offer a free initial consultation and face to face meeting with our licensed and qualified staff. This gives you the opportunity to discuss all the advantages and disadvantages of the processes of how to wind up a company and where you currently stand.

Of course, if you are facing insolvency and liquidation, you’ll want a company that offers advice and guidance at a good price. Having been in business for nearly 40 years, liquidation.co.uk has some of the most competitive fees in the industry.

If you want interested in finding out how to liquidate a business, contact our professional team to find out more and get a free initial consultation.

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