You should consider liquidating your company when continuing its business operations is no longer financially viable, or if you’re looking to close the company and extract its value.

Your company’s circumstances, including its solvent or insolvent position, will determine which liquidation procedure is most appropriate.

How do I know if my company is solvent or insolvent?

As company director, you should always be aware of your company’s solvent position. Defined by section 123 of The Insolvency Act 1986, there are two ways of determining if your company is insolvent: 

1. Cash flow test
   A company should be able to pay its bills and liabilities as they fall due. If not, it may be insolvent.
2. Balance sheet test
   If your company’s liabilities exceed the value of its assets, your company could be insolvent. The amount you owe to creditors should not be more than the value of your company’s assets, including any money it currently has in the bank.

Liabilities resulting from legal action, including County Court Judgements (CCJs), that remain unpaid are another indication of insolvency. 

When should I consider a solvent liquidation?

• Extract the company’s value
  If your company has value within it, an MVL ensures this is distributed amongst shareholders, taking advantage of the procedures various tax benefits, such as Business Asset Disposal Relief (BADR).
• Retirement or stepping away
  If you plan on retiring and you want to withdraw from the business, an MVL will allow you to close the company on your own terms.
• Formal company closure
  An MVL provides a legally recognised closure of your company, ensuring all your duties as a director are met.

How we can help you close and liquidate your solvent company

We can carry out the below formal procedure to help you close and liquidate your solvent company.

• Close and liquidate your solvent company via a Members Voluntary Liquidation (MVL)
  An MVL is the liquidation and closure of a solvent company. The procedure can only be carried out by a licensed insolvency practitioners, like ourselves, and will formally wind up and close your company whilst extracting the company’s maximum value through its various tax benefits. The company’s assets, including any premises, are realised, with the remaining funds distributed to shareholders once creditors are satisfied.
  More on Members Voluntary Liquidation

When should I consider an insolvent liquidation?

If your company is facing financial difficulty or is insolvent, you may need to consider formal closure. One of the most common options is a Creditors Voluntary Liquidation (CVL).

How we can help close and liquidate your insolvent company

As licensed and regulated insolvency practitioners, we can carry out the below procedures, to formally close and liquidate your company.

• Close your insolvent company 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 Creditors Voluntary Liquidation
• 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

Can I liquidate my company via dissolution?

If your company meets the criteria for dissolution, you can apply for the process. Dissolution ends a company’s legal existence by striking it off at the register at Companies House. This procedure is voluntary and for companies that have ceased trading, have no debts or assets and are not facing creditor action.

Although an insolvent company can be dissolved in certain circumstances, the procedure should not be used as an alternative to formal insolvency procedures where these are appropriate.

How to get in touch with us: The next steps

1. Speak with our initial advisers
   Contact our team via phone, filling out our form, or online chat. We will assess your circumstances and, if suitable, arrange a free consultation with a consultant to discuss your company’s situation.
2. Initial assessment
   During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or whether alternative solutions better suit your company’s problems.
3. Formally engage with Wilson Field
   If there is an appropriate insolvency solution, we will confirm the necessary steps to start the procedure and will issue you with the relevant documentation for you to formally engage us. 

In summary

You should consider the liquidation of your company if it is struggling financially or has become insolvent. Alternatively, if your company is solvent but has fulfilled its purpose, liquidation can offer a tax-efficient and orderly closure. We can offer free, confidential advice on the solvent position of your company, to help you identify the most appropriate solution for your situation, whether that’s liquidation or another form of insolvency support.

Case Studies

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.

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.”

Free Consultation

Request a free confidential telephone consultation from 9am - 8pm, 7 days a week.

Schedule a Call

Back

Please leave this field empty.