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How to wind up a limited company?

7 August 2017

It depends rather on whether you are chasing a debt or not. 

If the business is insolvent, then the process of winding up a company is simply one where the company is wound up by the court and the official receiver is charged with distributing the assets of the company to the creditors and investigating the conduct of the directors. This process follows the serving of a winding up petition where a creditor petitions the court to say that the business is not viable, cannot pay its debts so it should cease to trade and be "wound up". 

If you threatened with a winding up petition then you must take this very seriously. Read this page for more details. The main issue being that if you do not act, and the petition is advertised, then you will find that your bank account has been frozen. Obviously this will have a massive impact on the continued operation of the business.

Having said that the term "winding up" can be construed as just meaning liquidation. There are 3 kinds of liquidation; Compulsory liquidation is where the court process is followed by the creditor; Voluntary liquidation is where the debtor works with an insolvency practitioner to liquidate the assets, with the approval of the creditors; Members Voluntary Liquidation where the shareholders want to close down the company and wish to distribute the assets amongst themselves as the company has no reason to continue. 

In the latter case the company must be solvent and it is a criminal offence to make a false declaration.
It may be that you simply want to close the company down and it has minimal debts. This is called company dissolution. The basic rule here are that the business must have ceased trading for 3 months.

If you are chasing a debt and you want to wind up the company then be careful. Firstly, the main thing to remember is that issuing a winding up petition should be a last resort. The debt has to be absolutely proven and not be in dispute. Secondly, the costs of issuing a petition are quite high as well at some £2-£3000, so it is best reserved for large debts. If you want to know more, then visit our issuing a winding up petition page.

In essence, if you are considering any action to wind up a company then you must take advice, preferably from an insolvency practitioner. We are licensed insolvency practitioners and you can call us on 08009700539

Categories: Liquidation, Creditors Voluntary Liquidation CVL

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