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Guide to Liquidation Fees

16th May, 2022
Robert Moore

Written ByRobert Moore

Marketing Manager


Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.

Rob is now working with the Board at KSA Group Ltd to develop strategic marketing programmes to support the business plan and drive more company rescues.

Robert Moore
  • What work do the fees cover?
  • What is a Liquidation Committee?
  • Members Voluntary Liquidations:

When a company is in liquidation, the costs and fees of the process is paid for by the sale of its assets, or any remaining cash.  Creditors will receive some of their debt payment from these process proceedings.  However, given that the company usually has liabilities in excess of its assets, it is likely that creditors will receive very little.  The overall return that creditors receive will be, in part, dependent on the cost of the process. So, they have a direct interest in the level of fees that the liquidator charges. If creditors are unhappy with the liquidators’ fees being applied, they have the right to challenge this, as this guide explains.

What work do the fees cover?

  • Advising directors of their duties
  • Settling legal disputes or outstanding contracts
  • Making people redundant and processing their claims
  • Collecting debts, including those owed by company directors
  • Meeting deadlines for paperwork and keeping the relative authorities informed. These include;
    • Companies House
    • HMRC,
    • Insolvency Service and Department for Business Energy Innovation and Skills
  • Investigating transactions prior to the liquidation to check for discrepancies, such as preferences/undervalued transactions.
  • Alerting creditors to progress every 12 months and involving them in decisions where necessary.
  • Valuing and realising assets
  • Distributing monies to creditors and accounting for them.

There are fees to pay for all liquidation processes, see our pages here :

Compulsory Liquidation

Members Voluntary Liquidation

Creditors Voluntary Liquidation

What is a Liquidation Committee?

For voluntary or compulsory liquidations, creditors can appoint a liquidation committee, under their own right. This is a committee of 3-5 members who monitor the liquidation process and approve the fees of liquidators. This ensures it is fair to all of those involved. They work closely with the appointed liquidator and tend to be chosen at the creditors meeting. After the first 6 weeks of appointment, a meeting among the liquidator and committee occurs.  This can be continued every 6 weeks unless a date is directed otherwise. The purpose of these meetings is to report the progress of the liquidation and the level of the liquidators fees.

To fix liquidators fees, rules 4.127-4.127B of the Insolvency Rules 1986 apply. They state that the remuneration should be fixed by reference to the time properly given by the liquidator, and his staff, in attending matters arising in the liquidation.  This should be a percentage of the value of assets either realised or distributed, or as a set amount.

If the remuneration is not fixed, for compulsory liquidations it will coincide with a scale set, whereas for voluntary liquidations, court will be involved, either reducing, changing or disallowing the cost. Creditors may use this when they see the remuneration of liquidators too high or inappropriate.

Liquidators can also apply for remuneration of themselves to be fixed, if they feel it is inappropriate. They can get the amount either reduced or increased, depending on their argument. In doing this, liquidators apply to court. They must give 14 days-notice of intention to the members of the committee, who may then represent at the court hearing. If there is no committee, the creditors will be sent the application and one of them will represent instead.

The cost covers preparation of statements of affairs, as well as vat, numerous reports and calling the creditors meeting. The costs of liquidation can put directors off but not doing anything is likely to cost you more in the long run!  Generally the costs start at around £3500 + VAT. This would be for liquidating a company with a single creditor, such as having an unpaid Bounce Back Loan (BBL) or HMRC. For more than one creditor issue, we would expect the fee to be approximately £3,750-4,000 plus VAT. For more complex issues including companies who have landlords, employees, BBLs and supplier debts we will provide a written quote after our meeting with the directors to discuss the company’s options. Do get in touch to discuss your company’s liquidation, don’t delay and hope the problem will go away! 

Members Voluntary Liquidations:

For Members Voluntary Liquidations, fees vary. It is a tax efficient way to distribute assets and profits of your company to shareholders. Proceeds from the process are distributed to shareholders.  Unlike those discussed above, an MVL involves a solvent company, so the company is able to repay any liabilities, hence able to distribute funds to shareholders.  For MVLs, disbursements are important to consider. These are additional costs, being 4 different notices in the Gazette (around £60 each + VAT), a small search fee (£3) and a bond with a varying premium that is dependent on the assets value.

Worried Director What Will Happen To Me After Liquidation?

in Company Liquidation What is …?

"A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?"Actually, this statement is entirely false! Misconceptions like this frequently arise from individuals with limited understanding of the subject matter. Such misinformation can cause undue anxiety for directors considering liquidation, fearing it might personally affect them. Guess what? Listening to bar room experts, inexperienced accountants, or no insolvency specialist lawyers can stop decisions being made, this failure to make a decision is really what could land you in trouble. So how will liquidation affect me and how long does it take? Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time. What is more, if as a director, you have been compliant and on the payroll for many years, you can actually claim redundancy from the government like any other employee. But, and it is a big but, if you fail to act in time, fail to act reasonably, fail to keep books and records, continue taking credit KNOWING that the company cannot possibly repay it, then you ARE at risk of personal financial loss or worse such as losing your house. So, act now and get help for your company and more importantly start reducing your own risks.Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don't act to put the company into liquidation.If you fail to act and the company is wound up by the creditors (compulsory liquidation) then the Official Receiver (OR) will be appointed to liquidate the business and he or she will investigate the activity of the directors and the business over the last 2-3 years. This is known as a conduct report on each director.  If the OR can prove there was wrongful trading where, for instance, you have taken credit from a supplier or took deposits from customers when you knew that it was highly unlikely that you could pay them back, then you could be made personally liable.This is known as the "lifting of the veil of incorporation" that protects directors under limited liability. If this happens then you could made liable for PAYE, VAT and creditors monies from the time that you should have known the company had no reasonable prospect of surviving the problems it faced.Additionally, the directors may face disqualification proceedings under the Company Directors Disqualification Act 1986 for up to 15 years, they can be fined and may face the loss of personal assets like your home, or even personal bankruptcy.Look, if you as directors have acted naively you may not know that you have broken these laws, but now you do know, it is vital to ensure that you protect yourself as a director by acting quickly to cease trading and put the company into voluntary liquidation; or consider a company voluntary arrangement if the company is VIABLE if the problems are solved. What is Creditors Voluntary Liquidation and what does it mean for me? In short, liquidation usually means, the company's trading stops and it's assets are turned into cash or "liquidated".All other possible liabilities, like employment liabilities, landlord's rent or payments to lease companies are stopped. It really is the end of the company, but the "business" may survive if a phoenix is organised. Liquidation is a powerful way to END creditor pressure and let you get on with your life. What if I have signed personal guarantees? If you have signed personal guarantees or indemnities to lenders, then the liquidation could lead to them being called in if the bank cannot get its money back from the company. There is little that can be done about that, but you should not delay decisions on liquidation to try and prevent a PG being called in: just think what ALL of the company's debts landing on your shoulders would do. Also it should be noted that HMRC now rank ahead of floating charge holders in any liquidation since December 2020.  Consequently, this may well mean that lenders that you have personally guaranteed will get less recovery hence exposing you more.All banks will agree a deal to repay the PG over time - provided you work with the bank to reduce their exposure.One great piece of FREE advice - always make sure that ALL tax returns, VAT returns and annual returns have been completed and sent in and that other "compliance" issues are dealt with wherever possible. These are important processes and will help protect you as individual directors. It shows that you have been acting properly.  I have heard about directors being able to claim redundancy in liquidation If you have been employed by the company and made payments via PAYE then you will be able to claim redundancy from the government and this is in fact a very simple process (20 minutes to fill out a form and we can help with that) so there is no need really to employ a third party to make a claim.  This process has been open to fraud so the HMRC are cracking down on operators that claim to be able to get money back when there is not enough "paperwork".  It isn't worth the risk.  If it sounds too good to be true then it probably is!You need to learn more about the options. This is clearly a general guide so, if you have any worries at all, please, just call us and we will talk you through the situation free and with expert guidance for your situation. Call one of our advisors or if you prefer, call our IPs (insolvency practitioners) now:Just one CALL will help relieve the stress and get you out of the mess.Why not call 08009700539 or 020 7887 2667 now?We could help you start the liquidation process today.(8.15am till 5.00pm; Out of hours call on 07833 240747, Wayne Harrison (IP)  or Eric Walls (IP) on 07787 278527)Finally, please remember this: NO BUSINESS is worth losing your health, relationships, marriages or your children over. Act properly, take advice, get the problem sorted and then get on with your life. In a little while the stress will go and you can focus on other things that are more important.Want more information on liquidation? Get our new free 2023 Experts Complete Guide to Creditors Voluntary Liquidation that covers Bounce Back LoansWe are experts in liquidation, voluntary liquidation, administration, pre-pack administration, business rescue, corporate rescue and company rescue, we can help solve your problems but only if you talk to us. Call 0800 9700539 for help.or email us your worries at 

Worried Director What Will Happen To Me After Liquidation?

Notice of Intention To Appoint Administrators

A notice of intention to appoint administrators is when the company files a document to the court to outline that it intends to go into administration if a solution cannot be found to its immediate financial problems. It can be used as part of the pre-pack administration process as well as used to restructure a failing business to avoid its liquidation.

Notice of Intention To Appoint Administrators
Man with umbrella

What Is A Winding Up Petition By HMRC or Other Creditor

A winding up petition is a legal notice put forward to the court by a creditor. The creditor petitions to the court if they are owed more than £750 and it has not been paid for more than 21 days. The application, in effect, asks the court to liquidate the company as they believe the company is insolvent.

What Is A Winding Up Petition By HMRC or Other Creditor

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