Whether due to financial difficulties, a change in business strategy or simply because you want to ‘shut up shop’, liquidation is often chosen to close a company.
Liquidation is the process of closing down a company using a formal process such as a Creditors’ Voluntary Liquidation (for insolvent companies) or Members’ Voluntary Liquidation (for solvent companies). Liquidation usually involves selling off any remaining company assets to pay off outstanding debts and then distributing any remaining funds to the company’s shareholders.
In cases where a company has no assets, the liquidation process can be more complicated, as there may be no funds available to distribute to creditors or shareholders. We’ll explore the process of liquidating a company with no assets, the options available and the steps you need to take to make this a smooth, efficient process.
Options for liquidating a company with no assets
The preferable way to liquidate an insolvent company with no assets is to use a voluntary liquidation process called a Creditors’ Voluntary Liquidation (CVL). The alternative is to wait for your creditors to force the liquidation of your company, acting through the courts. This is called a Compulsory Liquidation. This option can often be stressful for you as a company director, as it takes the choice of liquidation out of your hands. It can also take much longer to complete.
Voluntary liquidation
A CVL is initiated by the company’s directors and shareholders. This process is typically used when a company is insolvent and can’t pay off its debts. It can also be used for companies with no assets if the directors and shareholders agree that liquidation is the best course of action.
Once shareholder approval is secured, a liquidator needs to be appointed. They must be a licensed insolvency practitioner, as CVL is a formal liquidation process. Once the liquidation process has begun, the liquidator will take control of the company, handle all the paperwork, correspond with creditors and send official communications to the relevant government agencies.
We offer a ‘No Asset Liquidation’ service at a low, competitive fixed-fee, starting from £4,000 + VAT. To speak to one of our liquidation and insolvency experts about this service.
Compulsory Liquidation
As we mentioned above, Compulsory Liquidation is initiated by a company’s creditors. This process is typically used when a company has no assets and is unable to meet its financial obligations.
The initial steps of a Compulsory Liquidation include
- Creditors submitting a winding-up petition to the court, outlining the reasons for petition.
- Serving the winding-up petition on the debtor company
- Attending a court hearing, where a judge will decide whether to grant the winding-up order
If the court grants the winding-up order, the company will be placed into Compulsory Liquidation and the Official Receiver will be appointed as the liquidator. The liquidator will then oversee the liquidation process, including the investigation of the company’s affairs and the distribution of any remaining funds to creditors.
How we can help you liquidate a company with no assets
By understanding the options available and following the necessary steps, it’s possible to voluntarily liquidate a company and avoid Compulsory Liquidation. As licensed insolvency practitioners, it’s our role to make sure the liquidation process is carried out in a timely and efficient way, ensuring all your legal obligations are met.
If you think your company could benefit from the advice of a licensed insolvency practitioner, our expert team is on hand to take your questions. We don’t have a call centre. Instead, when you get in touch you’ll speak to someone who has the expertise to give you the answers you need. We will explain the options and you will decide on the best way forward.