When considering the cheapest way to liquidate a company, a director should first determine which liquidation process is appropriate. To do this, the director must know its solvent or insolvent position.

If the company is insolvent

• Creditors Voluntary Liquidation (CVL)
  One closure process is a Creditors Voluntary Liquidation (CVL). The costs for this process vary depending on the company’s circumstances, such as the industry and nature of the business carried out, the level of its debt, the number of creditors, the number of employees, and the quantity and type of assets.
• Compulsory liquidation
  A compulsory liquidation is instigated by creditors looking to recover their debts and comes as the final stage after the presentation of a winding-up petition. The cost is taken on by the creditors, as you are forced into liquidation and have no control over the process.

If the company is solvent

• Members Voluntary Liquidation (MVL)
  The closure process is known as a Members Voluntary Liquidation (MVL). Our costs for this process start at £1,995 + VAT & disbursements.

How much does a CVL cost?

The fees for a liquidation (CVL) vary depending on the circumstances surrounding the business:

• Amount of debt the company has and the number of creditors owed to.
• Industry and the type of business the company carries out.
• Number of employees.
• Type and quantity of assets within the company.

How is a CVL paid for?

The cost of a CVL is usually covered by one or both of the below means:

• The sale of company assets If the sale value of your company’s assets is sufficient, the funds acquired may cover the IP’s costs.
• Director’s personal funding
  This may include the sale of personal assets or the use of savings.

How much does an MVL cost?

Our costing for an MVL has a pricing structure based on a tiered system designed to suit the individual requirements of each company. The cost is split into three different sections:

• Liquidator fees
  This involves all the work and duties carried out by our insolvency practitioner.
• Expenses
  There are several statutory expenses incurred as part of the liquidation process, which are mandatory.
• Liquidators’ insurance bond
  The cost of the insurance bond is based on the value of assets the company has.

How is an MVL paid for?

The fee is usually drawn directly from the company assets held in the liquidation, i.e., cash at bank, and is approved by the shareholders. The balance is then distributed in accordance with the company’s shareholding. As such, we do not usually require payment upfront for an MVL. 

When liquidation is not appropriate

If a company has no ongoing legal or insolvency proceedings, for a nominal fee, directors can apply for a company dissolution, which would see their company struck off at Companies House. Three months prior to a dissolution, a company should not:

• Have traded or disposed of stock. It can, however, dispose of assets previously used as a means of trading.
• Have a pension scheme which is not finalised.
• Have an administrative or Law of Property Act receiver in office.
• Be subject to prosecution of qualification.
• Have changed its name.

How can directors protect themselves against ‘insolvency experts’?

Directors should make sure that any insolvency process being carried out for them, is done so by a licensed and regulated insolvency practitioner. Any service provided by unlicensed insolvency experts is not legally binding.

It can be common practice for unlicensed, and unregulated ‘insolvency experts’ to charge a fee for an ‘insolvency service’. Directors can be charged for services often advertised as cheaper alternatives on topics such as:

• Company dissolutions
  Companies can enter a dissolution for a small cost which ‘insolvency experts’ will look to charge for. However, if the company still has creditors, it’s highly likely that creditors will object or will look to have the company reinstated so that it can pay its debts.
• Selling assets prior to liquidation
  No assets should be sold prior to liquidation as a means of paying anyone, whether that is a liquidator or creditors.

How to apply for liquidation

If you are looking for the cheapest way to liquidate a company, you should speak to our initial advice team, who can assess your business’s circumstances and help decide on the correct procedure. Our team of experienced initial advisors can help discuss any concerns about your company’s situation and assess the options available to you, offering free, confidential advice.

1. Speak with our initial advisers via phone or online chat. If suitable, we will arrange a free consultation with one of our consultants to discuss your situation in depth.
2. After an initial assessment, we will advise if the liquidation of your company is the most appropriate route forward, or if there are other avenues to explore.
3. We will confirm the necessary steps to place the company into liquidation and would be engaged to carry out those steps on the director’s behalf.

In summary

The cheapest way to liquidate a company can depend on several variables and circumstances. Whether the company is solvent or insolvent significantly impacts the route forward and associated costs.

• Creditors Voluntary Liquidation (CVL)
  To liquidate a company via a CVL will vary, depending on the industry and nature of the business, level of debt, number of creditors and employees and the type and quantity of assets.
• Members Voluntary Liquidation (MVL)
  Our cost for an MVL starts at £1,995 + VAT & Expenses and is based on a four-tiered pricing structure.
• Compulsory liquidation
  Directors can be forced into compulsory liquidation by creditors looking to recover their debts. The liquidation comes at the final stage after the issuing of a winding-up petition and the cost is borne by the creditors.

Case Studies

Statestrong Limited

Kelly Burton • Manufacturing • Administration, Creditors Voluntary Liquidation (CVL)

Insolvency experts Wilson Field has helped turnaround the fortunes of a loss-making manufacturing company in Lancashire providing a new future for its 80 employees.

Businessman Russell Blaikie acquired the struggling 40-year-old Statestrong Limited, headquartered in Lytham St Annes, through a pre-pack sale and has been able to help the company immediately utilising his expertise in manufacturing and management.

Arrangements for the purchase of Statestrong’s business and assets were negotiated by Sheffield business specialists Wilson Field who affected the sale shortly after being appointed.

The company, which manufactures and supplies aerosol and liquid products for use in health and beauty, household, automotive and industry globally, posted sales of £12m last financial year, but had suffered pressure from creditors with outstanding arrears.
The total value of the deal is undisclosed but includes the business and the assets of the company based on Boundary Road in Lytham St Annes and Tarporley in Cheshire, which will now trade as Statestrong Products Limited.

Mr Blaikie said:

“Transactions of this nature are sensitive and require careful handling. The team at Wilson Field provided exactly the right professional approach.”

Wilson Field’s insolvency practitioners Kelly Burton and Joanne Wright worked closely with Mr Blaikie along with senior corporate case administrator Gareth Kinneavy.

Kelly Burton, said:

“The company had a wealth of expertise but was straddled with financial liabilities which ultimately made its future questionable. Looking forward, a previously distressed business now has a viable future.”

M J Squire Limited

Kelly Burton • Construction & Engineering • Creditors Voluntary Liquidation (CVL)

A bespoke joiners and shop fitters in Sheffield, M J Squire Limited, had been in its trade for more than 30 years.

However, recently it has been forced to close due to the downturn in the construction and retail industry.

The company was located at Orgeave Close in Sheffield, after working for many household names over the years including House of Fraser, Levi’s, Austin Reed and Tommy Hilfiger.

Until 2014, it had been a profitable company but over the past couple of years, it had been unable to secure profitable contracts.

February 10^th, 2016 saw the appointment of Wilson Field’s Andy Wood and Robert Dymond as liquidators. This development for the company came as a result of suffering cash flow problems.

Operations at M J Squire Limited have now ceased and regrettably, all nine roles within the company were made redundant.

Andy Wood, insolvency practitioner from Wilson Field, spoke about his work on this case. 

“Declining sales at M J Squires significantly impacted cash flow and the business’ ability to meet its liabilities. In the face of tough market conditions, the director has taken the difficult decision not to continue trading. The business has closed and the assets are being sold.”

“It is very sad to see this well-known local business cease to trade after over 30 years. The downturn in the retail sector has hit this business hard.”

Derwent Castings Limited

Kelly Burton • Metals • Creditors Voluntary Liquidation (CVL)

Unsecured creditors owed money by a Derbyshire manufacturing company which went into liquidation are to receive a higher than the expected dividend of 60p in the pound.

A total in excess of £128,000 is due to be distributed to unsecured creditors of Whatstandwell-based Derwent Castings Limited, whose claims totalled over £192,000.

The company, whose roots date back to the 1940s, had traded profitably for a number of years but in late 2013 / early 2014 saw the cancellation of its largest sales contract which represented 70 per cent of its turnover.

Bosses at the company, which employed 16 staff including three directors, struggled to attract replacement business and had to drop prices. Further business was lost as a result of foreign competition.

Sheffield’s insolvency specialist Wilson Field was called in as liquidator and worked with the creditors’ committee of Derwent Castings Limited to secure the positive dividend.

Andy Wood, associate director and insolvency practitioner at Wilson Field said:

“Dividends for insolvent companies are generally low, or nothing, for a variety of reasons – cost of staff redundancies, difficulty collecting outstanding invoices, selling assets in a forced sale situation, selling specialist assets which have limited appeal to purchasers, deteriorating or perishable assets, as well as other costs involved.

“However, thanks to a very positive relationship with the creditors committee, I am delighted to return a healthy dividend to the unsecured creditors in the region of 60p in the pound.

“The supply chain is often greatly affected by a liquidation and in this case we have been able to help creditors.”

Derwent Castings Limited was incorporated in August 2002 and specialised in iron casting from the five-acre Derwent Foundry site at Whatstandwell near Matlock.

However, the iron founding operation at Derwent Foundry was first introduced back in 1946 by Wragg & Hawksley which produced cast iron pipes for the water industry.

In 1950 the foundry was acquired by WH Davis & Sons Ltd to supply castings for their railway wagon building business. Following a management buy out in 1984, the company was renamed Derwent Foundry Ltd and following its closure in July 2002, was bought by its present owners and renamed Derwent Castings Ltd.

Amongst jobs carried out on site were moulding using loose pattern and modern air setting (boxless) sand systems; metals work using the latest in electric induction melting producing a wide range of grey, SG and alloy irons; an independent Namas approved test laboratory, finishing, pattern making and machining facilities.

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