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The different types of liquidation

If your company is no longer needed or viable to continue to use, seeking advice from insolvency practitioners to understand what different types of company liquidation are available is the fundamental first step to successfully liquidating your company. Getting the best outcome for yourselves and anyone potentially owed money by the company immediately becomes the priority.

Here at we have been helping company owners and directors across the UK for four decades to understand the various types of liquidation and deal with the closure of their companies in both solvent and insolvent circumstances.

When your company is faced with insolvency then it can be a difficult time for all involved. Acting quickly can often save unnecessary stress as we take control of your affairs and act on your behalf. Our objective is to protect you, your directors, your shareholders and where possible, your company. It is vitally important you understand the difference between the various types of liquidation.

If you company is solvent (it can pay all the money it owes and its assets are greater than its liabilities) we will work with your accountants to make the process quick and easy for you.

If, for whatever reason, your company is facing liquidation then it can become overwhelming when presented with the different types of liquidation. As liquidation experts with 40 years in business, our team of qualified individuals are on hand to take your call today. We offer a completely free and confidential consultation and in all circumstances we will discuss the available liquidation options which may include the following different types of company liquidation:

Types of liquidation for a solvent liquidation:

Members’ Voluntary Liquidation – if the company has assets (often cash) to distribute to shareholders in a tax efficient way.

Liquidation isn’t only desirable when a company has become insolvent. If you’re looking to close a company that is not in any financial difficulty, then you may have heard of a Members Voluntary Liquidation. A Members Voluntary Liquidation or MVL is used when there are no debt liabilities but the directors and shareholders want to wind up the company.

When to us a Members’ Voluntary Liquidation?

  • A company may not be serving a purpose any longer
  • The director or owner could want to retire
  • A contractor may be planning on becoming a PAYE employee

Either way, because it’s a voluntary liquidation and there’s no debt involved, there’s no need for an enquiry by a licensed insolvency practitioner (also known as a liquidator) as to why the business failed. However, you still need to instruct an insolvency practitioner to carry out this type of liquidation:

  • The directors will need to hold a meeting with shareholders and agree the intention to ask for an Members’ Voluntary Liquidation. Because there can be some tax advantages to a process like this, it is often seen as a formality.
  • Once the decision is agreed, a Declaration of Solvency needs to be signed. The licensed insolvency practitioner will check that this is a true representation of the company’s finances.
  • The final stage of an MVL is the closure of the business and its removal from the register at Companies House.

If you are considering a Members Voluntary Liquidation, the team at will be able to give you the advice you need and take your company through the entire liquidation process from beginning to end. Our team have over 40 years experience working with business owners and contractors from all industries.

The different types of liquidation – insolvent liquidation:

Start Afresh Liquidationif you wish to close your insolvent company and move your business into a new clean company.

This service is unique to as we are effectively entering an insolvent company into Creditors’ Voluntary Liquidation (CVL) but are using it as a business rescue process.

Using this type of liquidation process will allow the directors of a company to be able to purchase the goodwill and assets of the company and to go forward and trade within a new company minus the debts of the old company.

What are the benefits of Start Afresh Liquidation as a type of company liquidation?

  • Start again with a clean slate
  • Buy the assets of the old company to use in the new company
  • Turn your business around and make a fresh start

No Asset Liquidationif your company has nothing left in it but pressure from third parties owed money means liquidation is needed

If you want to liquidate your company but there are no assets remaining, then a No Asset Liquidation would be a cheap and efficient process to enter.

What does the No Asset Liquidation package include?

Our No Asset Liquidation package is designed to be low cost and an easy process for all involved. It is appropriate when the company:

  • Has ceased to trade
  • Has no assets
  • Is insolvent

The following is included in our No Asset Liquidation package:

  • Free telephone advice
  • Fixed fee quote
  • Preparation of all statutory paperwork
  • Case Manager assigned to you for the duration of the process
  • All meetings held by Zoom call or telephone or at the most convenient location for you 

Creditors’ Voluntary Liquidation (CVL) – the most commonly used type of liquidation in the UK for insolvent companies.

When a company director or shareholder needs to close down a limited company that has become insolvent, a Creditors’ Voluntary Liquidation procedure is likely to be used. The CVL process will ensure the company meets all legal requirements to close.

Don’t forget insolvent means that the company cannot pay those that it owes money to.

If a company is unable to meet its debts (what it owes), the directors and shareholders can agree to move the company into liquidation. The assets from the company are then used to pay any outstanding debts to creditors to the extent that the value of assets allow.

Do you need to use a Creditors’ Voluntary Liquidation?

If you need to close your company because it is insolvent, you will benefit from going through the process of a Creditors’ Voluntary Liquidation. This is a legal process that needs to be handled professionally by licensed insolvency practitioners.

With most limited companies the liability is on the company rather than the directors and shareholders, unless there are, for instance, specific guarantees to pay money owed to certain third parties.

It’s important to understand that this type of liquidation does not prevent, under advice, the rescue of parts of the business that operated within the company

Compulsory Liquidation

What is a Compulsory Liquidation?

A Compulsory Liquidation of a company is a court-led process that should be used as a last resort to wind-up a company. Whether it is the creditor, director or company themselves looking to dissolve the company, they should explore other options before proceeding with the winding-up petition for this type of liquidation.

If the liquidation process is decided upon, then it will be at the court’s discretion when the hearing will be called for a winding-up order to be presented to the company.

This liquidation process is only available to insolvent companies, and is typically started by a creditor who is owed more than £750 from a company and is tired of waiting for their payment.

How can help you sort out the different types of company liquidation

As industry leading experts with 40 years’ experience; we are in the best position to match any like for like quote ensuring you receive the best service for the lowest price.

Don’t forget that if your business can be saved, whether within your existing company or through a new company, we can explain the process and options for this as well!

The different types of liquidation


1.  What are the different types of company liquidation?

Liquidating a company is split into two categories:

  • The company can pay everyone it owes money to therefore it is solvent
    • Members’ Voluntary Liquidation
  • The company cannot pay everyone it owes money to so it is insolvent
    • Creditors’ Voluntary Liquidation
    • Compulsory Liquidation
    • No Asset Liquidation
    • Start Afresh Liquidation
2.  How much will liquidating a company cost and who pays?

A company will usually pay to liquidate itself from its assets (cash, money owed to it, physical assets etc.)

  • If a company does not have assets to use, then typically company directors and shareholders pay to liquidate the company
  • If a company is forced into liquidating through the courts (Compulsory Liquidation) then a deposit and costs must be paid to the court
  • Liquidating an insolvent company with will start from £3,000 plus VAT
  • Liquidating a solvent company with will start from £995 plus VAT and insurance bond and advertising costs etc
  • We are happy to consider payment terms for liquidation costs wherever possible and generally work on a fixed fee basis
  • Please look out for unlicensed advisors who will add their costs on to the fees of any insolvency practitioner and push the overall cost upwards.
3. When is the right time to liquidate a company?  

For a solvent company (one that can pay its debts and has cash or assets remaining)

  • Tax is often a big factor in when is the right time to liquidate
    • Which tax year does a personal capital gain fall into?
    • Is a budget review due that may affect tax rules for the future?
    • What other personal capital gains fall within the relevant tax year?
    • Is there a time restriction on the application of Business Asset Disposal Relief (formally Entrepreneurs’ Relief – a personal tax relief)?
  • Are you starting a new full-time role and won’t need your company?
  • Has your business just been sold?
  • Are you considering retiring from your business?

For an insolvent company (one that can’t pay its debts and owes more than it owns)

  • If a winding up petition is being threatened or has been presented against the company
  • If the outcome of a court case is expected to go against a company and it can’t pay the likely award
  • If the business of the company is no longer viable
  • If a company will not be able to pay the wages for its staff
  • If a landlord is threatening re-possession of the company’s premises
  • If enforcement action is being taken by those owed money by the company
  • If a business has had to cease suddenly due to unforeseen circumstances
4.  What are a directors’ responsibilities in an insolvent liquidation?

When a company goes into this type of liquidation, the directors responsibilities must be clearly understood. The process can be a lengthy one but once implemented, a lot of the pressure is naturally relieved from the director or directors running the business. When a business is insolvent, winding up the company shifts pressure on to the liquidators and their team including protecting assets and preventing more debt. As a director, it is crucial that you follow the correct legal process when liquidating your company.

As industry leading experts with 40 years experience, we are perfectly placed to manage the process for you. We offer a free, no obligation consultation and can explain the process in more detail.

Directors liquidation responsibilities:

  • Once you agree the company is insolvent – in other words, it cannot meet its debts – it is the directors liquidation responsibility to ensure the company ceases trading immediately. This reduces the damage to the company but also protects you as a director.
  • You should not take on any more debt and you should try to secure assets which can be sold by the liquidator. If you continue to trade, knowing that your business is in trouble, you will have to face an investigation by the Insolvency Service and could be prosecuted.
  • As a director, you need to call a shareholder meeting and reach an agreement about winding up the company. An insolvency practitioner will then be brought in to handle the sale of assets and manage the liquidation. Creditors may be asked to agree with the decision.
  • The director also has an obligation to provide complete information to the liquidator in a timely fashion, including financial records and other paperwork for the business. This is something we will be able to advise on once the process has began for this type of company liquidation.


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