Liquidate liquidating liquidation
Insolvency essentially means that a business reaches a point where it is not able to make necessary payments when they are due.Choosing liquidation converts the business assets to cash, which is then used to make these payments.This risk RISES the longer you don't act to put the company into liquidation.If you fail to act and if eventually the company is wound up by the creditors (compulsory liquidation) then the Official Receiver (OR) will be appointed to liquidate the business and he or she will investigate the activity of the directors and the business over the last 2-3 years.An intrinsic part of the liquidator’s role would be to investigate all company affairs should they need to recover any of the company’s assets that have been misplaced or sold at less than market value from the company as the liquidator is at liberty to reverse these transactions."A man in the pub said I cannot be a director of any other company if I liquidate my company. As a result of this rubbish, many struggling directors worry about liquidating their company as they think it might seriously affect them personally. Listening to bar room experts, inexperienced accountants or lawyers or marketing people can stop decisions being made, this failure to make a decision is really what could land you in trouble. This nonsense just highlights that people make things up all the time about subjects they have little knowledge of.
Did you know that if the OR finds that the directors have knowingly traded whilst insolvent and they failed to act, took credit without reasonable prospect of repaying the debts, failed to submit accounts or a number of other offences, then it is possible you will face PERSONAL action?
If the company is deemed insolvent any remaining assets will be sold in order to pay off any remaining creditors.
Any amount remaining after all necessary payments have been made is then distributed amongst any shareholders.
While liquidation might seem generally straightforward, there are in fact three different circumstances under which a company can be sent into liquidation.
For each of the types of liquidation outlined below, there is a specific process that must be followed: Members’ voluntary liquidation In some cases, the business owner might choose to discontinue the company for a variety of reasons.