On occasion, when all other avenues have been exhausted and the company is no longer able to trade, an insolvent liquidation may be the only appropriate way forward.
Creditors’ Voluntary Liquidation
The causes can be varied, for example pressure from HMRC to repay tax arrears, legal action being threatened by trade suppliers, or failure of a major client which may also lead to a large bad debt.
These and other issues could leave the company in a position where it can no longer trade. Directors need to be aware that a company is referred to as insolvent if it cannot pay its debts as they fall due, or if its liabilities exceed its assets.
At CVR we are able to assist shareholders and directors with the winding up of a company. The process is a creditors’ voluntary liquidation and involves the winding up of a company and its affairs as well as the realisation of its assets for the benefit of creditors. Whilst a director can propose a company ceases to trade and be wound up, the process cannot be started until 75 per cent of shareholders agree.
Throughout this process we can assist the directors and ensure compliance with the new Insolvency Rules 2016 which recently came into effect.
We have considerable experience in winding up companies, and have acted as liquidators of organisations ranging from complex multi-national groups to stand-alone owner-managed businesses.
We will endeavour, wherever possible, to work alongside stakeholders to maximise the return to creditors.
For more details please contact your local office partner.
If the company is experiencing financial difficulties and prompt action to resolve these is not taken by the directors, it is very likely a creditor will petition to wind up the company.
A creditor can commence such a process if they are owed £750 or more. A statutory demand is served upon the company which then has 21 days to comply with the terms of the demand. Directors should therefore be looking to take professional advice at this point in time.
Once this period has lapsed then the creditor may present a petition to the Court to wind up the company. Once the order has been made then the company is in Compulsory Liquidation.
If the company does receive a winding up petition it will have seven days to respond to the Court. If you wish to protect the company and prevent it from ceasing to trade you will need to take immediate action. It is possible that a rescue procedure could be put in place.
At CVR we have a highly experienced professional team of Insolvency Practitioners who will be able to assist and advise on the best way forward.