Company Liquidation

balance of pros and cons

Advantages and Disadvantages of Creditors Voluntary Liquidation

in Company Liquidation

Understanding the advantages of liquidation is crucial for ensuring you make the right decision for your company when it matters most. This guide will tell you all about the key advantages and disadvantages of liquidation. What is Liquidation? Liquidation is the official insolvency process of bringing a company to an end. The company is required to stop trading and any business assets will be sold to pay creditors what they are owed.There are three types of liquidation:Creditors' voluntary liquidation (CVL):The most common form of liquidation, CVL happens when your company can no longer pay its debts. This article will focus primarily on CVL.Compulsory liquidation:Your company is no longer able to pay its debts, and an application is made to court for the liquidation of the company.Members' voluntary liquidation (MVL):Your company is able to settle the debts currently in place, however you still want to close it.The Advantages of a Creditors Voluntary Liquidation These are the most beneficial advantages you are likely to see should a CVL become the best option for your company.Minimise Debt Repayments: Your debts will be largely written off (except in certain circumstances). Liquidation costs will be met through the sale of company assets. Unless you've given personal guarantees or have drawn director's loans, these debts needn't be settled by you or your shareholders.Cancel Lease Arrangements: You can prevent any further payments on lease or hire purchase agreements, as they are typically terminated when you liquidate your company.End the Legal Action: Entering liquidation enables you to bring an end to the prospect of legal action from your creditors.Enable Staff to Claim Redundancy Pay: Your staff will be able to claim redundancy pay, uncollected wages and outstanding holiday pay. As a director, you can claim redundancy as well if you paid yourself via PAYE, do not owe the company money, and have an employment contract.The Disadvantages of a Creditors Voluntary Liquidation Investigation into Director's Conduct: The liquidator is obliged to look into the conduct of the directors. They will look for evidence of wrongful trading, misfeasance, fraud, etc. Of course, if you have not done anything that would be deemed as "dodgy" or extremely incompetent, then you have nothing to worry about.Personal Guarantees May Be Called In: When a company goes into liquidation, any personal guarantees you have given do not die with the company.Overdrawn Director's Loan Accounts Need to Be Repaid: If you owe the company money, the liquidator will attempt to recover it. They tend to take a quite tough line on this as it is often the only asset the company has left.Cannot Reuse Same or Similar Name: Once a company is liquidated, you cannot set up a new company with the same or similar name. This is covered by section 216 of the Insolvency Act 1986.With all these critical aspects legally resolved, you can focus your attention on your next venture. The ability to make a fresh start is the most fundamental of all the advantages of liquidation. 

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Advantages and Disadvantages of Creditors Voluntary Liquidation

What Is A Statement of Affairs?

in Company Liquidation

A statement of affairs (SOFA) is a structured document which provides important information on the assets and liabilities a company has at a given moment in time and any other relevant information pertinent to its financial situation.

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What Is A Statement of Affairs?

Liquidation Testimonials

in Company Liquidation

Business services company (creditors' meeting 26th July 2013)  My company had been suffering financial issues after a loss of income and was having great difficulty in agreeing a time to pay arrangement with several areas of HMRC.After a particularly stressful period where an inspector had paid successive visits to my house, upsetting my wife and new baby and leaving letters demanding payment, I really did not know where to turn next. I started looking around on the internet to see if there was any help possible and luckily it was then that I came across the KSA Group website. I read through their services and testimonials and decided they may be able to help or offer advice so I contacted them immediately.I can honestly say from the very first phone call a huge weight was lifted off my shoulders. I cannot say how much better I felt after that initial consultation. I felt immediately KSA had the expertise and personnel to be able to help with my particular circumstance.My subsequent meetings with Gary to explore the options available, and finally Wayne to start the legal processes left me feeling much happier about my situation and that I was doing the correct thing. At no stage did I feel unable to ask questions or that my interests were not being looked after. From start to finish I was treated with professionalism and fully supported through the entire process. I cannot say thank you enough for the help I have received from such a fantastic team. Liquidation of an IT company I just wanted to thank you and the team for helping me and indirectly my family through what was a very difficult time, both emotionally and financially. Wayne was fantastic at putting me at ease and throughout the whole insolvency process, it was less stressful than I had first anticipated; many thanks Wayne.I must say the the professionalism and personal touch of the whole team was exemplary. From the first introductory meeting all the way through the final insolvency process. What was a significant factor in my decision to assign KSA Group was the feedback given by previous clients and the sensitive way in which my case was dealt with because the circumstance leading up to the difficult decision to apply for insolvency were extra ordinary. My deepest thanks to everyone and as promised I will ask the wife to bake some special KSA Group class cupcakes for the team to enjoy which I will deliver personally.Many many thanks...Kindest Regards, AP

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Liquidation Testimonials