A Guide to Voluntary Liquidation

The creditors voluntary liquidation is the most popular mechanism for closing down a company that is insolvent. The latest insolvency statistics for the fourth quarter of 2008, published by the Insolvency Service shows that over 3,000 companies took the option of closing their doors this way. To put that into some kind of perspective, that was a 62% rise on the same period in 2007, which dramatically illustrates the down turn in the economy.
With companies struggling to maintain profitability, and as a result not being able to pay their debts as and when they fall due, this is leading to many directors, deciding to seek expert insolvency advice, from a practitioner experienced in such matters, such as ourselves. A director must be mindful at all times that if their company is struggling, they cannot continue to trade with it unless they are very confident that they can ride out any adversity. If not they must take steps to crystalise their losses and bring the company to an end. A failure to do so could result in an action for wrongful trading.
This can be done in as little as three weeks from start to finish.
A professional such as an Insolvency Practitioner can help with a creditors voluntary liquidation and to do so will prepare a statement of affairs, showing your creditors, the state of the company and why it cannot continue to trade. They will be invited to a meeting at which they will be asked to vote that it be closed down. As this is so commonplace now many creditors do not even turn up at a meeting but send in their vote by fax.
A report will be prepared on the conduct of the directors in relation to the running of the company and it is for this reason that it is imperative to take early advice when deciding if the company needs to cease to trade. Any delay may lead to adverse comments on the report.
It is possible to arrange a pre-pack sale of the assets back to directors if it is important for the continued survival of trade. In this instance the insolvent shell will be wound up but a viable business will be preserved.
Call a professional now if you would like to discuss a Creditors Voluntary Liquidation or any other debt solution.