However, the insolvency practitioner may refuse the appointment and may propose more appropriate options if he or she finds that the directors wish to liquidate their company, although more appropriate remedies are available. The company may be dissolved voluntarily, on the initiative of its directors or ex officio by order of the court. In both cases, this means that a liquidator is appointed to terminate the existence of the corporation so that it can be dissolved. If the liquidation decision is taken voluntarily and the company is insolvent and cannot pay all of its creditors, the liquidation is called “voluntary liquidation of creditors”. If the company is solvent and can pay all its creditors in full, the liquidation may be a “voluntary liquidation of the partners”. Once the receiver has called these meetings and received permission, the company will be dissolved within three months at Companies House. The purpose of voluntary liquidation is to terminate the operations of a business, complete its financial affairs and dismantle its corporate structure in an orderly manner, while repaying creditors according to the priority assigned to them. If you have decided to close your business by voluntary liquidation, let Clarke Bell guide you through the business. We have over 28 years of experience assisting businesses throughout the liquidation process, both voluntary and involuntary, and we can do the same for you. To find out what we can do for you and your business, don`t hesitate to contact our team of experts today. Shareholders must hold a general meeting of the company, which adopts a resolution to: The liquidation process can take from 6 months to several years, depending on the case. The insolvency practitioner is required to submit annual activity reports to all creditors and shareholders, who are informed of the progress of the liquidation during the previous year. These reports are also filed at Companies House.
The liquidation of a business can be done in two ways; Compulsory liquidation and voluntary liquidation. The assets of the insolvent company are sold during the liquidation process of both types of liquidation and the proceeds are used to settle creditors. Once the affairs of the company have been fully settled, the liquidator holds the last meetings of the company and its creditors. Voluntary liquidation procedures may be different in other countries. In the United Kingdom, for example, voluntary liquidations are divided into two different categories. One is voluntary liquidation of creditors, which usually occurs when a business faces insolvency. If that money has not been divided among the shareholders until the corporation is struck off the register, it goes to the state. Contacting a liquidator to resolve the company is simple and straightforward as long as the evidence or arguments are relevant and can show how the liquidation provides the most appropriate outcome to the company`s creditors. Another reason for voluntary liquidation of companies would be to benefit from a tax break for the closure, reorganization or transfer of assets to other companies in exchange for shares of the acquiring company. It is advantageous for the target company because the transferred share of capital is treated favorably for tax purposes. When a company is liquidated, voluntarily or involuntarily, it appoints a third liquidator to sell its assets for it. Liquidators essentially have the legal authority to act on behalf of the company to sell assets and complete a liquidation.
Liquidators are sometimes called trustees. Proving that you have taken a proactive role in meeting your debt obligations is also beneficial if there is an investigation into the director`s conduct. Voluntary liquidations can begin when a specific event occurs, which is described by the board of directors. In this case, a liquidator is appointed. It is therefore crucial that immediate steps be taken to consult with AABRS once the company is considered loss-making and the future of the company is uncertain. Although creditors and shareholders have been informed of the upcoming meetings, the corporation is not yet formally in liquidation and directors continue to be considered the public office holders of the corporation and are therefore required to act in the best interests of creditors. Although the outcome of voluntary liquidation is the same as that of forced liquidation, voluntary liquidation is usually less stressful because the entire procedure is properly planned and the directors of the insolvent company may seek advice and assistance from an insolvency practitioner throughout the liquidation process.