Just a quick note to say a big thank you to all the staff at KSA, our CVA was passed today by creditors voting in an overwhelming number including HMRC to accept the proposal as prepared by KSA.
The road to reach today’s conclusion has been bumpy, but at each stage your team has supported and guided us through the issues and we have reached a very satisfactory outcome to the benefit of customers, staff, all creditors and shareholders.
Closing Down a Limited Company with Debts
If the company’s in debt and is no longer viable, the best option is to put the company into Creditors Voluntary Liquidation (CVL). Creditors will need to approve proposals and appoint a liquidator.
Closing down a limited company can be a straight-forward and efficient process. There are several ways to do this depending on your circumstances and the business’s position.
If the business is solvent and owes nothing to creditors, then you can close the company by putting the company into members’ voluntary liquidation or strike it off the Companies Register and dissolve the company.
See below for more details of the options available:
Members Voluntary Liquidation
An MVL will close down the solvent company, giving the shareholders equal access to the cash and assets. Often used for tax purposes, directors can be eligible for Entrepreneur’s Relief if there is £25k or more taxed on shareholders using Capital Gains Tax instead of dividends.
Directors must complete a statutory declaration to confirm the company can pay everything in full, including liquidation costs.
Our experienced licensed insolvency practitioners can help you prepare the legal work and begin the process. Call us on 0800 9700539.
Cease trading and dissolve your company
If there are no assets and no money in the business, you may be able to dissolve the company and get it struck off the Companies Register. Dissolution can avoid liquidation costs and publicised insolvency notices.
The company can only be dissolved after it has stopped trading for three months and the majority of creditors have agreed to the dissolution. However, the company can’t be in any formal insolvency procedure like a company voluntary arrangement or administration.
All steps must be followed correctly otherwise the process can end up being delayed. We’ve put together a dissolution programme which includes guides, letter templates, board resolutions, checklists and forms to help you dissolve your company. Click here for more information.
Once the business has ceased trading, remember to keep a record of all accounts, copies of all letters to possible creditors and keep all books and records. After 3 months, if no one has taken any legal action, it is possible to commence the Company Dissolution process. Please note that there are strict rules on dissolution and it should be generally noted that any creditor can reject the dissolution of the company.
If the company has any material creditors, possible liabilities to HMRC, claims from customers and or assets, then the correct option to use is Creditors Voluntary Liquidation.
Creditors Voluntary Liquidation (CVL)
When a company goes into liquidation, the business and its assets are sold and turned into cash, and then distributed equally to creditors.
If there is significant amount of debt, a CVL may be the best option as it is the director’s duty to maximise creditors’ best interests. Liquidation could result in the best return for creditors.
Only creditors can appoint a liquidator (hence the name), however directors can put forward CVL proposals at a meeting with shareholders.
If you would like to liquidate your company, call us on 0800 9700539 – we can talk you through the process, organise the legal paperwork and begin proceedings.