“My company is failing, I do not think it will be able to recover and I would like to liquidate the business and bring it to an end, however I do not have the money to pay in Insolvency Practitioner. Am I able to liquidate the company myself?”
In simple terms, Liquidation means selling a company’s assets and using the proceeds from this to repay its debts. This means that closing down is a practice that a business can carry out independently, particularly if a company wants to perform a partial closure or restructuring, when a company will sell some it’s assets in order to repay debts with the intention of continuing the business.
However, there are formal insolvency procedures that are known as voluntary liquidation and compulsory liquidation. These can only be conducted by someone with UK government oversight of their actions, which is only a licensed insolvency practitioner or someone working directly for the government. This is because regardless of if you instruct a liquidator voluntarily or if your creditors force you into a compulsory liquidation, one thing remains the same – your creditors will be in control of who is appointed as the liquidator. For this reason, the law in the UK requires that a licensed insolvency practitioner be appointed as the liquidator in any formal liquidation proceedings.
When you are seeking advice, it is important to make sure you are speaking to a qualified licensed insolvency practitioner, not a middleman or a broker that maybe looking to charge unnecessary fees. If you are looking to just close your company and don’t have any assets that need to be liquidated, you can just dissolve the company and have it struck off the Companies House register. This process cannot be commenced until your company has been dormant for 3 months, you need to write to all creditors and tell them and it typically takes around 6-8 months from the point of ceasing to trade.
It is important to be extra careful about your actions and accounting practices once you are aware that the company is insolvent or trading insolvent. If you try to sell assets yourself, outside of a formal liquidation process, and these are sold at a price below market value, you are risking claims being brought against you, whilst if you are continuing to incur debts you risk a claim of wrongful trading. You should also not take out any loans or credit while the company is insolvent as you could be held personally liable for these debts should you be found guilty of wrongful trading or even fraudulent trading if your actions were deliberate.
If you are concerned about doing the process yourself, or worried about the cost of liquidating your company and feel you may be unable to afford it, please contact us on 03301 289489 or email help@lucasross.co.uk for free advice.
