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

Insolvency, Voluntary Arrangements and Liquidation

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

Understanding insolvency is often complicated enough without trying to determine what is liquidation of a company or more specifically, what is voluntary liquidation. Whilst insolvency doesn't need to result in liquidation, the two terms are often used synonymously. Voluntary liquidation generally refers to voluntarily deciding to wind up a company, in which case the there would be a provisional liquidation to safeguard assets until the winding up order is made. A provisional liquidator, usually a licensed Insolvency Practitioner, is appointed to the task of safeguarding those assets.

Voluntary arrangements, on the other hand, may or may not involve liquidating some assets to settle with creditors, but are rescue methods to avoid bankruptcy. Even though the company might be insolvent, there is probably some ray of hope that financial matters will see a reversal and the company will be on even ground again. On the other hand, companies gone into liquidation are trying to realise assets to wind up the company and go out of business. They can be solvent or insolvent and the process of liquidation will vary accordingly.

An insolvency voluntary arrangement is commonly recommended by Insolvency Practitioners if there is reason to believe the company will do an about face and become financially solvent again. There is no such thing as a solvency voluntary arrangement because debts are being paid on time! However, there is such a thing as solvency voluntary liquidation because this simply means the company has decided to wind up business and close the doors.

It can be a bit confusing trying to understand insolvency, voluntary arrangements and liquidation when confronted with financial woes. It is always best to seek the advice of a licensed Insolvency Practitioner at the first signs of financial distress so that every effort can be made to avoid insolvency/bankruptcy. Many times bankruptcy can be avoided if an IP steps in on time to put the company back on track. That, in a nutshell, is the difference between insolvency/liquidation and voluntary arrangements.

Find out more...