When deciding if you should liquidate your company, there are many factors and considerations to take into account. The most important consideration to include, is if your company solvent or insolvent? Do you want to continue to trade? And do you feel the business has a future?
Are you looking to close your solvent company?
If your company is solvent, you may be wondering what the most cost-effective way of closing your company is. One option is a dissolution (also known as striking-off), but if you meet certain criteria, a Members Voluntary Liquidation (MVL) could mean that Business Asset Disposal Relief (Entrepreneurs’ Relief) saves you more money on tax.
Are you looking to put the business, along with its debt, to bed?
If you want to walk away from the insolvent company, again, the best course of action will depend upon the complexity of the business and the worth of its book debts and other assets. In some cases, an administration will yield a better return for creditors, the commencement of which will absolve you from all director duties. Otherwise, a Creditors Voluntary Liquidation (CVL) will be appropriate, where any assets are realised, sold on, and the business dissolved, ceasing to exist along with the remaining debt.
Do you want to continue to trade?
You may be suffering from financial setbacks but want to continue to trade as you think the business could recover. If you’re struggling to make ends meet because of issues with book debt, financing could be the lifeline you need. Or, if you’ve been hit with a short-term and unexpected issue, such as the sudden loss of a major client or a vital piece of machinery breaking down, there are formal agreements such as a company voluntary arrangement (CVA) or a time to pay arrangement, which can help you consolidate your debts and move the company forward.
Do you want to restructure and restart your business?
You may feel that your business is viable and profitable, just not in its present structure in this company. Depending on the complexity of the business and the value of its book debt and other assets will decide whether a pre-pack administration or a pre-pack liquidation will be most appropriate. In the event of either, you may be able to purchase back your assets at market value and start again from scratch under a new name.
When deciding if you should liquidate your limited company, there are many confounding variables to consider. If your company is insolvent, you may have no choice but to liquidate, this could either be forced upon you by creditors, or be voluntary. If you believe the company can continue trading, without creditor pressure, then there are rescue alternatives. Even through the process of liquidation, there are routes out of financial difficulties, which enable a company to progress.
How we can help
After considering what might be best for your company and what you are looking to achieve, we can help assess the best options for your company. We understand that insolvency procedures can be complex and daunting, but we’re here to guide you through all the available options, assess your situation, and advise you on the best turnaround and restructuring procedures for your circumstances. Whatever your vision for the future of your company, we can help.
Request a free confidential telephone consultation from 9am to 9pm, 7 days a week.