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Liquidating a Company – What You Need to Know Liquidating a company sounds like a scary and difficult thing to do, but in reality it is usually very straightforward and hassle-free. The problem is that even the most realistic directors do not give much thought to what would happen if their company faces liquidation. Forward-thinking and effective business planning is vital, but there are all sorts of reasons why liquidation could become an issue and these are not always things that directors can prevent or even plan for. So what should directors know about liquidation? Actually, those who manage their business properly and have proper business practices in place do not need to know a great deal about liquidation. The main thing they should be aware of is that if liquidation becomes an option then expert advice is vital. So long as they recognise the importance of seeking assistance, directors should not have to worry about the intricacies of liquidation. “We have experts who know the process inside-out, so directors do not have to worry about the rules and regulations,” explains Lyndon Ogden, Director at Company Liquidation Services. “So long as directors know to come to us for assistance as soon as they face insolvency or liquidation that is the main thing.” In fact, directors whose companies go into liquidation do not play much of a role in the process. As soon as the liquidation process begins the directors are relieved of their obliga tions, leaving them free to move on to other companies or business interests. And because they can now start the liquidation process online it is even more efficient, quick and cost-effective. In effect, a director can start a company liquidation online ha ving gained advice from the experts, and then he is free to get on with his life. The other parts of the process are handled by the appointed liquidator, and he will only need the director in the event of further information being required. The whole proce ss usually takes around six to eight months, and when finalised the liquidation means the company ceases to exist. “Liquidating a company is usually straightforward and there is no need for directors to trouble themselves about the process,” Lyndon continues. “Of course, if they have any questions or concerns the experts are there to help at any stage.”

Company Liquidation or Administration? If you’re a company director whose business is about to make an exit, then no doubt you’ll have heard the words ‘administration’ and ‘liquidation’ fired around quite a bit. But what are the differences between the two? While it’s true that company liquidation and company voluntary administration are both insolvency procedures to help a business wrap things up, there are some fundamental differences which could sway the decision for you depending on your needs.


The question of liquidation or administration is a question which insolvency practitioners are asked perhaps more than any other. Liquidation means the end of company trading (as we touched upon in a previous article, offering a stress free exit from the business and a way to settle any outstanding debts. Company voluntary administration on the other hand, will seek out ways to settle debt while allowing the company to continue trading. Quite often, if the debts are excessive, administration will end in liquidation after a short while.

Company Liquidation While liquidation may seem like a headache, it’s actually a relatively stress free exit route from a business that’s about to close its doors. A company director doesn’t need to concern himself too much with the process once it’s under way and the liquidation process will work to pay off outstanding debts. If a creditor has petitioned on your behalf, this repayment through assets is known as compulsory liquidation. Voluntary liquidation is a viable option when a business is simply no longer needed, regardless of whether or not it’s insolvent, and can be triggered by its members or directors. Despite its negative connotations, liquidation is an excellent way to settle outstanding debts and write of tax liabilities. It also holds off any creditors and they are able to claim back any VAT that they may be owed from outstanding debt. Perhaps more fundamentally however, is that after the liquidation process you are free to set up another business and commence trading, carrying everything that you’ve learned from the process along with you. Liquidation is seen as something which happens to the company, not to the individual.

Company Voluntary Administration Company voluntary administration can be used to effectively ‘save’ a company, while some of its assets are sold off to settle outstanding debts. A company in administration can sometimes retain its original employees and management if it gets the right advice and assistance (and the debt situation isn’t too out of control). Trading is allowed to continue under administration and the business can be sold to settle debts with creditors or pay off shareholders. However, there are one or two drawbacks to consider when entering company voluntary administration. The process costs money (usually around 10% of the outstanding debt), and monthly repayments will need to be made in order to carry on trading. If these payments aren’t met, the company will likely face compulsory liquidation. Before making any definitive choices it’s recommended that you take advice from liquidation experts who will talk you through your options and help you do what’s best for your business.


Liquidating a company what you need to know