The liquidation of a business can be a stressful time for all involved. RSM Tenon can guide and advise you through the process to ensure the best outcome.
There are two types of liquidation – Compulsory (by the court) and Voluntary. Liquidation ensures that the company’s affairs are closed down in an orderly manner.
Voluntary Liquidation
Voluntary liquidation comprises of two distinct categories. A Members Voluntary Liquidation is appropriate when there are sufficient assets to cover all liabilities in full. A Creditors Voluntary Liquidation is more common and occurs when a business is insolvent and has no viability. Directors should consider this option if they want to avoid the risk of wrongful trading.
Compulsory Liquidation
Compulsory liquidation is a court-directed method of winding up a company. The Liquidator will realise and distribute the company’s assets and conclude the company’s affairs. It is often the result of a creditor being unsuccessful in recovering their debts. The court will issue a Winding Up Order if the company is unable to pay its debts because of one of the following:
- The value of total liabilities exceeds the value of total assets
- A statutory demand greater than £750 remains unpaid for 21 days
- The company has not satisfied a previous judgement
- The company has decided that it should be wound up by the Court
- That it is just and equitable to wind up the company
Why will you need this service?
- You want to close down your business