Our support and services for companies who are considering closing
Creditors Voluntary Liquidation
Voluntary Liquidation is essentially you (the director/shareholders) choosing to close down your business due to acknowledging your company is insolvent, also known as a Creditors' Voluntary Liquidation. Recognising that the business is experiencing irreversible money worries is a part of the duties of being a director.
Director(s) must not put the business into financial difficulty by taking monies unnecessarily from the company and or take out credit, knowing the company cannot repay it.
It is the duty of a director(s) to ensure that their insolvent business does not impact other companies.
Your company is insolvent when your liabilities (debts/overheads) exceed your assets (cash, stock) and/ if the business is unable to pay its debts when they fall due.
If you’re looking to place a business into a solvent liquidation, this is known as a Members’ Voluntary Liquidation (MVL). An MVL allows a solvent business to be closed down, creditors/debts paid in full. The remaining money/assets within the business divided between all directors & shareholders in the most tax-efficient way. The liquidator’s position is to realise the company assets, pay off the creditors, and distribute the remaining assets to shareholders.
Before opting for a Members’ Voluntary Liquidation, the directors and shareholders must be fully aware of the tax implications.
When voluntarily liquidating the business, the director(s) and or shareholders chose the Insolvency practitioner that they would like to act on behalf of the company. The liquidator’s role is to realise the business’s assets and recover a fair value back on behalf of the creditors.
There are many benefits to both directors and businesses:
- There is a potential for the creditors to receive a dividend with realising of the business assets
- The company being voluntary liquidated prevents existing or additional creditors from being negatively impacted by the failing business
- The director(s) reduces its risk by operating an insolvent business.
Company Money Worries are here to guide and support your business and whether a Voluntary Liquidation is right for your business.
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