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How Commercial Liquidation is Initiated

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Business liquidation is often the result of insolvency and there are several ways in which it can be initiated. However, companies in liquidation can still be solvent yet choose to wind up business for reasons of their own. In any case, regulations regarding liquidation must be complied with and the first course of action would always be to seek the services of a licensed Insolvency Practitioner.

The first way, other than solvent liquidation, to seek commercial liquidation is when the directors or members seek liquidation when they believe the company is about to go bankrupt. The company can either appoint an administrator or seek an administration order even seek a Creditors' Voluntary Liquidation to initiate liquidation. Voluntary liquidation of a limited company may be much less complicated than corporate voluntary liquidation, but will still need to have an administrator or IP appointed to oversee the process.

As well, creditors can seek commercial liquidation as can banks or creditors who hold charges or mortgages of the company's assets. This is referred to as a debenture holder. Next the Secretary of State for Trade and Industry is also able to petition for the compulsory liquidation of a company if it is believed that the company acted against public interest.

In other words, there are a number of ways in which commercial liquidation can be initiated and if you feel that your company is in danger of becoming insolvent it would be in your best interest to consult a licensed IP before matters are taken out of your hands. Sometimes a Company Voluntary Arrangement can help to avoid bankruptcy/insolvency but only a licensed IP would be able to initiate those proceedings. Before filing company or commercial liquidation, make every effort to learn what alternatives are open to you.

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