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Insolvency and Liquidation

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Many people tend to equate insolvency with liquidation, but this doesn't always need to be the case. A company in liquidation is always winding up business while a company that is insolvent is simply one that cannot pay its debts and does not see any hope of doing so on the horizon. That being said, a company that is declared insolvent can be appointed an administrator who has the means at his or her disposal to literally turn the company around financially, bringing it back to solvency!

However, when the terms Company Voluntary Insolvency and Company Voluntary Liquidation are used, the two are generally understood as the winding up of the company. In this respect, 'insolvency' and 'liquidation' are used synonymously. According to Voluntary Bankruptcy UK laws, there are very strict procedures which must be followed in order to declare your company insolvent. The best advice would be to seek an Insolvency Practitioner who has extensive experience in companies liquidation procedures and knowledge of UK company liquidation law.

In fact, an Insolvency Practitioner would be the only person recognized by the court to oversee insolvency procedures. The rules are very strict in this regard and IP's are specialists in the field. They can recommend filing bankruptcy or might even suggest that a Company Voluntary Arrangement is in the company's best interest in order to settle debts while maintaining the legal right to continue doing business. The IP would be the person filing court documents, setting up meetings with members and/or creditors and would also be the best person to help directors, board members and even creditors decide the best course of action. Because the Insolvency Practitioner is licensed and regulated by R3, they are held accountable for their actions and can have formal complaints lodged against them. For this reason, insolvency and liquidation are best left in their hands.

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