Voluntary Liquidation is the process in which the directors of a company decide to halt company operations and close the business due to overwhelming business debt. The act of liquidation is carried out with the assistance of an insolvency practitioner and is a process voted upon and commenced by the directors of a business based on the decision that a business cannot pay its liabilities or continue to trade.
Liquidation is typically initiated when the members attend a general meeting and pass a resolution (under The Companies Act 2006) to voluntarily wind up the company.
The liquidator must be a qualified practitioner and is responsible to collect the company’s assets and distribute them to the company’s creditors, and in the event of a surplus, to the members. The liquidator is required to notify the Gazette and Registrar of their appointment within 14 days. If the liquidation is voluntary, notice to the local newspaper is also standard practice.
Additionally, in the case of a voluntary liquidation, the liquidator has the power to continue the running of the business in question (if feasible) to ensure a beneficial winding up of the company.
What happens next?
After the company’s affairs have been fully wound up, the liquidator is required to present an account to the final meetings of the creditors and members, and also advertise the meetings in the Gazette at least a month before they take place. Within one week of the meeting, the liquidator must also send the account to the registrar as well as a return of the final meeting.
For more information about Voluntary Liquidation and how we can assist you and your business, please contact us as soon as possible.