Liquidation Rules and Regulations
There are a range of liquidation rules and regulations relating to the liquidation with variations depending on the type of process you are going through. You will certainly require the services of a licensed insolvency practitioner if you are winding up because the company is unable to pay its debts.
The main pieces of legislation relating insolvency and liquidation are:
- Once the option to liquidate has been taken by the directors, you will need to meet with shareholders and pass a special resolution that the company is to wind up.
- The resolution must be published in The Gazette within 14 days and a copy sent to the registrar within 15 days.
- Creditors should be informed and a liquidator appointed who will be presented with a statement of affairs. The appointment is published in The Gazette and the registrar informed.
- The liquidator calls in assets and distributes them to creditors. They update the registrar at regular intervals during this process.
- When the affairs of the company are wound up, the liquidator sends a statement of affairs to the registrar and the business is removed from Companies House register.
- The directors and shareholders reach agreement to wind up the company and produce a statement that they can meet their debts.
- A liquidator is appointed and a similar process to the CVL is followed. If a liquidator thinks that the company is unable to pay its debts they can change from an MVL to a CVL.
- The liquidation of the company must go through court and is instigated by a petition from, for instance, a creditor who is owed over £750 or can prove the company can’t pay.
- Successful petitions are placed on the company record.
- An official receiver is appointed to oversee the winding up of the business unless an insolvency practitioner is appointed.
- The process then follows the same line as a CVL.
If you are considering liquidation or facing insolvency, we can help.