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How Long Does It Take To Liquidate A Company?

30th November, 2023

Written ByWayne Harrison

Director and Licensed Insolvency Practitioner

07879 555349

Wayne works with business owners and their stakeholders across all businesses from SMEs to large companies. Primarily focussed on helping businesses to restructure and survive he also has extensive experience of liquidations and administrations in every sector. He has overseen the successful sale of London and Birmingham based law firms, has handled the administration of several haulage firms and worked extensively with a National food retailer to ensure its supply chain was not disrupted when a key delivery haulage contractor entered administration.

Wayne Harrison
  • What do we mean by liquidation?
  • A quick recap of the liquidation process:
  • How long does it take to liquidate a company?

If your company is insolvent and is to be liquidated it is useful to know how long the process takes, so that you can get on with your life.

When you’re in that situation, you need to know how liquidation works, so you can take the necessary steps for both you and your business.  It is important to realise that the faster that you can get all the paperwork in order, the quicker the process takes.  As a director you have a duty to cooperate with the liquidator.

Generally it takes between 3 months to up to 1-2 years to liquidate a company. However the length of time depends on the complexity of the liquidation.

What do we mean by liquidation?

There are two core types of liquidation; voluntary and compulsory.

Which one you choose depends on whether you decide to go into liquidation yourself, or are forced into it by your creditors.

Either way, it’s a very important process that will result in the dissolution of your company. You’ll stop trading, your employees will be made redundant and your business assets will be sold to pay creditors.

A quick recap of the liquidation process:

1. Voluntary liquidation or Creditors Voluntary Liquidation (CVL)

A CVL is the form of liquidation where directors decide to liquidate a company. This normally occurs when they realise they’re insolvent, with no hope of restructuring.

The first step is when the majority of the company’s board sign a resolution to go into liquidation.

Shareholders then attend a general meeting to approve this decision. 75% of these shareholders must approve the liquidation if it’s to go through.

The process can be done in one of two ways; A creditors meeting or deemed consent.

Deemed consent is where a date is set, not less than 7 days in the future, that the creditors have to object to the appointment of the liquidator or request an actual meeting.  This is by far the most common form with 95% of all liquidations started in this way.

An actual physical or virtual meeting is held more commonly on larger and more complex liquidations.

Additionally, if you would like to liquidate your company, call us on 0800 9700539 or you can fill out a form on our website and get a quote in minutes. We can talk you through the process, organise the legal paperwork and begin proceedings.

2. Compulsory liquidation

This process is much slower than a CVL, and the company has no control over the sale of assets. The government also charges 17% tax on all assets which makes this the least favourable option of the two.

Compulsory liquidation begins when a creditor serves a statutory demand giving you 21 days to pay, or 18 days to set the demand aside.

If you do not pay or refute the demand, the creditor can apply to the court for a winding up hearing. The company that’s to be liquidated must be given 14 days’ written notice of the hearing.

At this hearing, the court will decide whether the petition should transition to a winding up order, resulting in the liquidation of the company.

How long does it take to liquidate a company?

The appointment of a liquidator, which means that the powers of the directors cease, usually takes between one and two weeks.

If more than 90% of shareholders agree to short notice, liquidation can happen within seven days. This is the minimum statutory notice for creditors.

It doesn’t stop there in that the liquidators now have to sell the assets etc, do investigations and file the necessary paperwork.  This can take 1-2 years, if not longer.  The bigger the liquidation, the longer it takes (usually).

For compulsory liquidation, the time between the initial threat and the end-of-court proceedings is usually three months.

However, in both cases, this is just the time it takes to approve the liquidation. After approval, the appointment of a liquidator, the sale of company assets, and agreeing creditors’ claims and working out what return goes to them can add anywhere from three months to a year to liquidation proceedings.

There is no legal time limit on business liquidation. From beginning to end, it usually takes between six and 24 months to fully liquidate a company. Of course, it does depend on your company’s position and the form of liquidation you’re undertaking.

What happens next?

At the end of the process, the liquidator will send a final report to creditors after investigating the company and the directors’ conduct.

If the Insolvency Service chooses to investigate you for wrongful or fraudulent trading, it can ask to keep the liquidation open longer.

If you are found guilty of wrongful or fraudulent trading, you could be held personally liable for the company’s debts. This is particularly true if you have acted improperly or outside the creditors’ interests.

However, if you are found innocent and have acted properly, you can claim a redundancy from the government like any other employee. Contrary to what you may be led to believe the process of claiming redundancy as a director is very simple (takes about 20 minutes on a form) so there is no need to use third parties. You can then start your next venture either as a director of a different company or in a completely different role.

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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