Liquidation & Company Closure
Need to close your company? Whether you're insolvent or solvent, we'll guide you through the right process and help you understand your options.
What is Liquidation?
Liquidation is a formal process used to close a limited company. It can be used for insolvent companies (for example, a CVL or compulsory liquidation) and for solvent companies (an MVL).
If your company is struggling to pay debts or you're under pressure from creditors, it's important to seek professional advice early.
If you have become insolvent and the business has no hope of recovery, this voluntary process shows that you are adhering to your director's duties and acting responsibly as a director. Seeking professional advice early shows that you are doing what you can to ensure that company creditors' positions are not made any worse.
Types of Liquidation
Creditors' Voluntary Liquidation
The most common form of liquidation for insolvent companies. You voluntarily choose to close the company, maintaining control over the process and selecting your own liquidator.
Compulsory Liquidation
Forced upon companies by creditors who have tried to get the money they are owed and have not been successful. You will receive a winding-up petition and a court date.
Members' Voluntary Liquidation
For solvent companies that can pay all debts and still have over £25,000 in the bank. This offers decent tax breaks and is a clean way to close a successful company.
Why Avoid Compulsory Liquidation?
Compulsory liquidation can be very stressful as you will have little control over the process. Thankfully, a winding-up order can be avoided by seeking advice early from insolvency specialists.
In compulsory liquidation, you will not be able to select your own appointed liquidator.
No Money for Liquidation Fees?
Sadly, sometimes compulsory liquidation is the only option available if there is no money to pay the liquidation fees. Even if this is you, please still make a call, and we will try our best to give you some good advice on what to do. We must warn you though… we're going to ask you to write us a review at the end of it, but even that bit isn't compulsory!
What Happens During Limited Company Liquidation?
Each of these liquidation types requires the appointment of a licensed insolvency practitioner. When you enter liquidation, you will take a step back, and the insolvency practitioner will take over. They will begin to close the company down and communicate with your company's creditors.
Being a limited company provides you with more protection as a director when compared to sole traders, for example. Limited companies are covered by limited liability, which means that the business is a separate legal entity to you, the director.
If no wrongdoing is found (such as wrongful trading or fraudulent trading) when closing a limited company, you should not be liable for company debts.
When You May Be Personally Liable
In some instances, you may be liable for company debts. Directors can be made personally liable for things such as overdrawn directors loans, BBL or CBILS fraud, and selling assets undervalue. We will help you understand your position in full before you make any decisions.
Selling Assets Before Liquidation (Often Called "Pre-Pack Liquidation")
Some directors are told they need a "pre-pack liquidation". This isn't usually a formal process in its own right — it's a phrase often used to describe a planned sale of assets completed around a liquidation.
This might involve arranging a buyer and valuations in advance, then completing the sale once a licensed insolvency practitioner is appointed and the correct process is followed.
Important Considerations
If the buyer is connected to the existing directors, the sale must be handled carefully and properly documented. If directors plan to continue trading after liquidation, there can also be restrictions around re-using the same company name.
How Long Does Company Liquidation Take?
You can get your papers signed in a matter of days, and from that point, the insolvency practitioner can take on the stress of dealing with your creditors.
The actual company liquidation process can take varying amounts of time, and it entirely depends on your situation. A straightforward liquidation with minimal creditors and no evidence of wrongdoing should be completed within a few months. However, larger liquidations with more debts involved can take longer.
Before appointing your insolvency practitioner, you should get all of the details in writing, including a projected timescale and liquidation costs. This can help to reduce the risk of issues further down the line for all company directors.
Papers Signed
Days
IP Takes Over
Immediate
Process Complete
Few months+
How Much to Liquidate a Company?
The cost of your liquidation depends on various factors, such as the size of your company and how many creditors you have.
Small Liquidation
£4,000 - £6,000
+ VAT
Larger Liquidation
From £6,000+
Depends on complexity
Options to Fund Your Liquidation
The thought of paying thousands for liquidation can be worrying, especially when you're already in financial distress. The good news is that there are options available: you could use company funds or company assets, or you may even be entitled to a director redundancy claim that could cover the cost of your liquidation.
How to Close a Limited Company That Never Traded
Generally, closing a business that has never traded should be a simple process. After all, if you haven't traded, then you should have no outstanding creditors and no debts.
Those with no outstanding debts owed can consider using a strike-off method. You must also cease trading three months prior to starting the process.
Company Dissolution (Strike-Off)
The cheapest way to close a company
£33
Companies House fee
- No insolvency practitioner required
- Suitable for companies with no debts
- Not suitable for all business types
I Need Help with Liquidation and Company Closure
If you need support with liquidation, look no further. Our insolvency experts are here to support you with all aspects of your company. Get in touch today for free, confidential liquidation advice.
Frequently Asked Questions
Common questions about liquidation and company closure
What is a Creditors' Voluntary Liquidation (CVL)?
How much does it cost to liquidate a company?
How long does company liquidation take?
Will I be personally liable for company debts?
What is compulsory liquidation and how do I avoid it?
Can I close a company that has never traded?
Ready to Take the Next Step?
Don't delay — early advice gives you more options and reduces stress. Our friendly team is here to help you understand your position and find the right solution.