There is no limit on the timescale of a company’s liquidation. From start to finish it can be anywhere between a few months to a couple of years for a company to be fully liquidated. It depends on the company’s financial position and the type of liquidation that is being undertaken.
What are the types of liquidation?
The timescale of liquidating a company, depends on the type of liquidation process you wish to take and the complexity of the job type. A solvent liquidation will typically be quicker than an insolvent liquidation as the company has no remaining creditors and it is a case of closing the business down and distributing assets. An insolvent liquidation can be a longer process and will depend on the nature of assets to realise.
Insolvent liquidation – Creditors Voluntary Liquidation
A creditors voluntary liquidation is a process that formally closes an insolvent company. The length of time it takes from appointing a liquidator to having the company formally closed, will depend on the nature of the business and the financial position it finds itself in. The formal process follows as:
- Formal instruction and appointment of insolvency practitioner
- Arrangement of creditors meeting
- Collation of information & drafting of directors report and statement of affairs
- Attending the shareholders & creditors meeting
- Appointment of liquidator & liquidation commences
Once you’re aware that your company is no longer able to pay its debts as and when they fall due, it’s important to act quickly to ensure no actions of wrongful trading can be taken against you. Early action taken by directors will give the best chance of a smooth liquidation process.Find out more about how the CVL process works
A compulsory liquidation is initiated by a creditor and is the final step they can take to receive the monies they’re owed. The process takes a lot longer than a creditors voluntary liquidation, as the creditor first has to go through several statutory demands. A compulsory liquidation also means that the company director will lose all control of the liquidation proceedings.
- A statutory demand is issued, which allows the company 21 days to pay or contest the debt
- If the debt remains unpaid, the creditor can issue a winding-up petition with the courts
- A winding-up order will be served if the company still fails to pay their debts
- There will be a court hearing, unless the company is able to demonstrate why the debt is not valid. If they are unable to do so, the company will be entered into compulsory liquidation
Solvent Liquidation – Members Voluntary Liquidation
A members voluntary liquidation is the formal closure of a solvent company in a tax efficient manner. It should be quicker to do, however, it depends on the nature of the business, what outgoing debts need to be paid and the financial situation of the company. The process follows:
- Discuss timescales & Declaration of Solvency
- Board meeting
- Provision of information
- Advertisement in the gazette
- Write to bank and distribution of cash
From receipt of your signed engagement paperwork and all the required information, the company can be placed into liquidation within 7 days (subject also to receiving the required consent from the shareholders). Your cash can be distributed to you within 7 days of receipt of the cash.
It should be noted that upon liquidation, the company remains in existence until the process is complete. The period of the liquidation should take no longer than 12 months. Responsibility for every aspect of the company’s affairs is passed to the liquidators.Find out more about how our MVL process works here
How we can help
If you’re considering liquidating your company, whether as an insolvent or solvent company, the quicker you act the better chance you have of an outcome you desire. We can provide free, confidential advice and help you assess the position of your company, as well as the cost timescale and process involved with a liquidation.
There are no set timescales when it comes to liquidating a company. A compulsory liquidation has a set procedure to follow, but the timescale of a CVL will depend on the size and complexity of the company. An MVL won’t take as long, considering that the company has all its debts paid and is in a strong financial position.
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