• About Us
• Meet The Team
• Factoring Services
• Insolvency Services
• CVA
• Pre Pack

Liquidation of an Insolvent Business

Contact the UK’s Leading Experts in Business Recovery Today...

When the director and shareholders decide that it is time to wind up an insolvent business, there is really only one course of action they can take if the winding up is voluntary. The only voluntary method of liquidating an insolvent business is through a procedure known as Creditors' Voluntary Liquidation, CVL.

Insolvent businesses can seek liquidation by following guidelines established by law in the UK to ensure that creditors will be paid to the fullest extent possible during liquidation proceedings. The first step is when the members meet, passing a resolution according to the Companies Act of 2006 stating that they are resolving to voluntarily wind up the business.

They must state that they are insolvent and have no hope of paying debts. The special resolution states that the company cannot continue due to liabilities. An advert must be placed in the Gazette within a 14 day timeline as well as in 2 local papers. It must also be sent to the Registrar within a 15 day time limit.

Within that 14 days there must be a meeting with the creditors who have been given a minimum of 7 days advance notice. At the meeting with the creditors a statement of affairs is presented and one of the members shall be appointed to oversee the meeting. They will declare the business insolvent to the creditors who will then vote whether or not to accept the CVL.

A liquidator is appointed, usually an Insolvency Practitioner who is a solicitor or accountant, and the company's assets are then liquidated to satisfy debts. If you have any questions about how to go about declaring your business insolvent, it is best to speak with an IP or rescue company prior to meeting with members. In so doing, you will be able to abide by UK laws and have the guidelines in place to explain to members in the meeting.

Find out more...