Yes, it is possible for you, as a director, to close and liquidate a company and then start a new one. Liquidating a company with debts is often the most appropriate action when it becomes clear that the business is insolvent. Entering a formal liquidation procedure will close your company, ceasing its trading operations, clearing its unsecured debts, realising its assets, and removing it from the register at Companies House.

Formally liquidating an insolvent company with debts typically has no legal bearing on you setting up a new company, either immediately or at a future date. Nor does it typically impact any other directorship you may hold.

Will a formal liquidation procedure write off my company’s debt?

Yes, once your company has finished a formal liquidation it’s unsecured debts will be written off and the company will cease to exist.

Limited companies have limited liability protection, separating you from the company’s debts, so it’s unlikely you will be held personally liable. Company debts which have been personally guaranteed will not be written off during liquidation and you will still be personally liable.

Can I dissolve and strike off my insolvent company?

No, dissolution is only applicable to solvent companies. It is not an appropriate means of closing an insolvent company and should not be used as an alternative to a formal insolvency procedure.

When you apply to dissolve and strike-off your company, you must notify any outstanding creditors of your intentions beforehand. The strike-off is then advertised in the London Gazette, giving creditors a chance to object. Additionally, creditors can also restore the dissolved company via a court order for up to six years after the dissolution if they have a valid reason to.

Are there any restrictions on starting a new company after liquidation?

While you can start a new company after having one liquidated, there are certain restrictions on starting a new company which must be adhered to:

• Reusing the company name
  A newly created company cannot typically use the same or a similar trading name as the old, insolvent company. There are certain instances when this can be done through an application to a court. However, it must fall under the legal requirements of Section 216 of the Insolvency Act 1986. We can help you navigate the technicalities around reusing your old company name and determine whether this is appropriate for your situation.
• Providing an HMRC security deposit
  If HMRC believes there’s a risk that your newly formed company may fail to pay its taxes, they may require a security deposit.
• The selling of goods and assets
  If a new company is founded after the closure of an insolvent company, any goods and assets which are bought from that insolvent company as part of that process must be purchased at a fair market value. We can provide advice and reassurance that any of your company’s assets will be sold at market value.
• Transferring employees
  If you are starting a new company with the same or similar business to your old company, employees are only able to transfer under TUPE regulations. We can ensure you and your staff understand how a Transfer of Undertakings Protection of Employment (TUPE) would work as part of a liquidation.
• Previous acts as a director, including disqualification
  When a company enters liquidation, the insolvency practitioner may review its financial affairs to understand the circumstances leading up to the insolvent period. If any issues are identified, such as trading while insolvent or other actions that could raise concerns, these might affect your ability to act as a director in the future.

How we can help you close your insolvent company

If your company has unmanageable debts and is struggling with creditor pressure, as licensed insolvency practitioners, we can offer free, confidential advice and can carry out the below formal insolvency procedures to help you liquidate your insolvent company. We can also offer advice on alternative insolvency procedures, such as formal repayment arrangements or a restructuring process, if they would be more suitable.

• Close your company down via a Creditors Voluntary Liquidation (CVL)
  A CVL is a liquidation procedure for companies that are insolvent. The process will formally close and liquidate your company, ceasing its trading operations, realising any assets and removing the threat of creditor legal action. If your company has employees, they can claim for redundancy and other statutory entitlements through the government’s Redundancy Payment Service (RPS). The process is final and irreversible. Once completed your company’s unsecured debt will be written off and the company is dissolved, allowing you, the director to move on.
  More on a CVL
• Close your company down and start again via a pre-pack liquidation
  A pre-pack liquidation is a type of CVL where the sale of your company’s assets is arranged before liquidation, allowing business operations to continue seamlessly under the purchasing company. The company name may be reused, and employees can transfer under TUPE. Contracts and essential agreements can also be included as part of a sale, ensuring minimal disruption to your business operations. This process eliminates the unsecured debts of your previous company, providing a fresh start free from previous unsecured liabilities.
  More on pre-pack liquidation

How to get in touch with us: The next steps for engagement

1. Speak with our initial advisers
   Make contact with our team, via phone, filling in a form or online chat. If suitable, we will arrange a free consultation with one of our consultants to discuss your situation in depth.
2. Initial assessment
   During the consultation, we will assess whether the liquidation of your company is the most appropriate route forward, or whether alternative solutions, such as a CVA or administration, would better suit your company’s problems.
3. Formally engage with Wilson Field
   We will confirm the necessary steps to place your company into liquidation, or an alternative insolvency solution and will issue you with the relevant documentation for you to formally engage is.

In summary

If your company has debts and is insolvent, in most circumstances, you will be able to close and liquidate it, giving you the opportunity to start again. However, certain restrictions must be adhered to when it comes to starting a new company.

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