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Are you considering whether liquidation and company closure is an option for you? Then, you’ll likely want to know more about liquidation pricing.

What options do I have?

If your business is struggling financially, you do have a few options that you can consider. Of course, your personal circumstances will also need to be considered before beginning an insolvency procedure.

  • Creditors Voluntary Liquidation (CVL)
  • Members Voluntary Liquidation (MVL)
  • Company Voluntary Arrangement (CVA – payment plans)
  • Administration
  • Pre-Pack Administration

We can also provide support with HMRC Arrears, Overdrawn Director’s Loans, Bounce-Back Loans, and CBILs.

What factors impact the cost of liquidation?

The cost of liquidation varies from company to company. This is because no two companies are the same. The cost of liquidation depends on a range of factors.

  • The size of the company
  • The number of creditors who are owed money
  • The amount of money owed to creditors
  • Overdrawn director’s loan accounts

How much does it cost to liquidate an insolvent company?

The exact cost of liquidation depends on the factors above. You can expect to pay around £4800 + VAT for a straightforward liquidation with minimal creditors. There may be additional legal costs on top of this.

When choosing an insolvency practitioner, make sure that you speak to multiple people. While insolvency practitioners often offer the same outcome, the route to get there and the liquidator’s fees can vary.

Before you appoint your insolvency practitioner, you will need to ensure that you have all of the costs and details of your liquidation in writing. This can help to reduce the risks of more costs being uncovered down the line.

We speak to many company directors who were promised a price for liquidation, and then when it’s nearly complete, they find that they are being pursued for thousands more pounds. This can often occur as details such as overdrawn directors’ loans have not been assessed prior to the appointment of the liquidator. You must ensure that the insolvency practitioner checks all of these aspects.

At Director First, we ensure that every aspect of your business has been carefully assessed before we begin the process. We are here to put the director first at every step.

How much does it cost to liquidate a solvent company?

As you’d expect, solvent companies can expect to pay less during the liquidation process. These companies have no outstanding company debts, which means that the insolvency practitioner will have much less to take care of. The solvent liquidation cost will vary. Speak to an insolvency practitioner about exact liquidation fees.

What’s the cheapest way to liquidate a company?

Companies can close for a variety of reasons. One of the most common reasons is due to financial difficulties. If your limited company has become insolvent and you owe creditors money, you will need to use a formal liquidation procedure to close the company or find a method of recovery – we can help you with both.

The most common type of liquidation is a creditor’s voluntary liquidation. As a director, you have many duties. One of these duties is that you act responsibly and seek advice quickly to protect company creditors. By entering a creditors’ voluntary liquidation, you are demonstrating that you are adhering to your director’s duties. Good director’s conduct will be viewed positively by the licensed insolvency practitioner during the liquidation process.

Sometimes, companies can close for other reasons and not due to financial struggles. Companies that have no outstanding debts are able to use the strike-off method. A company strike-off is the cheapest way to close a company.

These companies can fill out the DS01 form on the government website and apply to be struck off. The details will be advertised in the London Gazette, and provided that there are no objections, the limited company can be closed and taken off the register at Companies House.

In the past, companies with debts have tried to use the strike-off method and have been unsuccessful. It is not worth trying, as your company’s creditors will apply for a winding-up petition, and you will likely end up in compulsory liquidation.

If you’re unsure of your options, we’re happy to offer accurate and honest advice to help you.

What happens if I can’t afford to liquidate my company?

When you’re already dealing with financial issues, it’s not uncommon to wonder how you’ll pay to liquidate your insolvent company. The good news is that there are some options that you could consider to cover your liquidation costs.

Consider director redundancy pay

Many limited company directors are unaware that they may actually be eligible for director redundancy pay. You will need to assess whether you fit the criteria. The average redundancy pay claim of a director is £10,000. This could be more than enough to cover your liquidation costs.

Sell the company assets

Some directors choose to sell the company’s assets to make the money up to cover the company liquidation fees. You will need to ensure that this is completed legally by having independent valuations completed, or you may find yourself being made personally liable.

In some instances, selling the company’s assets may cover the costs of liquidation. Licensed insolvency practitioners will need to see evidence that this has been completed correctly when assessing the company’s financial situation. Make sure that you keep hold of the relevant paperwork regarding company assets.

Use the director’s personal funds/personal savings

This one can be tricky, but it involves using your own personal funds to pay. Be careful about when payments are made, as you do not want to be accused of preference payments. You might even consider selling personal assets to cover liquidation costs.

We’re happy to offer advice regarding liquidation pricing, so get in touch with us for no-obligation advice.

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Chris Worden

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