RDC Braille blog Liquidation of a Company – What is It?

Liquidation of a Company – What is It?

Liquidation of a company is the official process that brings an end to a limited company. The company will stop trading, assets will be sold off and profits used to pay creditors before the company is struck off (or dissolved) from the register held at Companies House. This is a formal procedure that cannot be forced on a company but can be a sensible option for directors who are facing financial difficulties.https://cheapliquidation.org.uk

Directors will need to vote on a resolution for the company to go into liquidation. Once this has happened, the process begins with an appointment of a licensed insolvency practitioner. An IP will ensure the liquidation process is a fair and proper one, as well as protecting the directors’ personal assets from any debts that are not covered by a personally guaranteed loan agreement.

Understanding the Liquidation Process in the UK: A Comprehensive Guide

As the company enters the liquidation phase, trade must cease and employees must be informed of this. The assets of the company will be sold off, and any profits used to pay outstanding creditors and shareholders. In most cases this takes a year to complete, but may be shorter or longer depending on the situation.

Unlike a CVL, there is no compulsion for a Director to use this procedure. However, it can be a good way for Directors to avoid the risk of being found guilty of wrongful trading in a post-liquidation investigation and to protect their assets. It also allows for a clean break so that directors can try their hand at a new business venture.

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