Liquidation FAQs

Liquidation FAQs

 

Frequently Asked Questions About Creditors Voluntary Liquidation. Don’t listen to the bar room experts!

Q: What is a liquidation?

A: Liquidation means the process of a company closing and the assets being turned into liquid money – hence liquidation. It is organised and managed by a licensed insolvency practitioner.

Q: What are the first steps?

A: Work out if the company is viable (can it make a profit if costs are cut and profits rise?). If NOT VIABLE then consider liquidation as an option. BUT also look at rescue options, introducing more money or selling the company. Then contact us on 0800 9700 539. If you want to know more, see “What is Liquidation” page.

Q: How can you ease our worry, stress and stop the creditors calls?

A: Well the process of a company dying is not a happy one for the directors and or creditors. Directors cannot or will not give information on payments, so the creditors keep chasing because their systems say they have to.

Eventually the stress of this can cause you to be depressed and possibly even suffer illness. The best way to deal with a company that is simply not viable is to commence liquidation quickly. Call now to start relieving the pressure!

Q: What if we (the company) do not have any assets?

A: If the company has no assets, then the company may still enter insolvent liquidation (in other words there is no money to cover the cost). In this case you may consider paying for it as directors or shareholders or repay any money you owe to the company. By paying for the CVL you will end the worry and will be seen to act properly. The cost varies depending on the situation so call us for a quote! 0845 519 4930. Our back office function is in the North East and so we can keep our overheads down and deliver a value service.

Q: Can I be a director of another company if we liquidate?

A: Yes of course you can. Call 0845 519 4930 now for guidance.

Q: Will I be made bankrupt? If so what does that mean?

A: Only if you become personally insolvent after the liquidation. Like liquidation, bankruptcy is the LAST resort for an insolvent individual.

The liquidation could lead to bankruptcy if if you have provided personal guarantees to cover company borrowings from the bank, they may pursue you for the shortfall and may even force your bankruptcy or you may already have a lot of personal debt

Q: Can we start another business using the same name?

A: Possibly yes, but only if you buy the name from the liquidator or if a court allows. Failure to act properly in this can lead to CRIMINAL ACTION AGAINST THE DIRECTORS – so talk to us about “re-use of trade names”!

It is possible to start the business again under a new company, this is called a “Phoenix” company. There are strict rules on how to do this, call us for guidance. We can show you how to start again safely.

Q: Someone told me to appoint an administrator – what is that?

A: Administration is a very complicated subject see Our administration pages for detailed guides. Basically it means someone is appointed by the Court to oversee the insolvent company, he may sell it, close it or rescue it. The CVA route is the best rescue method, if you are interested in CVA see http://www.companyrescue.co.uk/cva-company-voluntary-arrangement for more information on that tool.

Q: We have not paid the PAYE for months, if we propose a liquidation (CVL) what will HM Revenue & Customs do?

A: The debt which you have built up is important because the IR is an “involuntary” creditor – in other words it cannot stop you building up debt unless it takes legal action to wind the company up – see COMPULSORY LIQUIDATION and because the funds you have failed to pay over are your employees’ tax and NIC deductions.

This is an illegal non payment and can result in the veil of incorporation being lifted (directors protection under limited liability) and the directors being made personally liable for the debt.

Many directors are completely unaware of this. Failure to correctly operate a PAYE scheme is also a criminal offence. The IR may ask the liquidator about the actions of the directors prior to the liquidation – did they know they were trading insolvently? Did they take reasonable steps to protect the other creditors? These questions can be complex and you should take legal advice if you are concerned.

Really though, if the debt is modest and the directors have tried their best, there will be little reaction to CVL from the tax man.

A quality KSA tip: make sure you file ALL PAYE and tax returns, P11D’s and so on. The Revenue takes a dim view of not filing these even if you cannot pay the tax.

A quality KSA tip: once again make sure you have filed all VAT100 returns (the VAT returns) and do not tick the box that says “payment enclosed”. Again this shows you are trying to act responsibly as directors – even if the company could not pay the VAT.

If we could show you how to get rid of the business problems, start again if you want to and comply with the law fully, wouldn’t that be worth 15 minutes of your time? Call now to find out more.

KSA are experts in creditors voluntary liquidation, fighting winding up petitions, advising on compulsory liquidation and the rescue alternatives like CVA – company voluntary arrangements.

Call 01289 333124 or free on 0845 519 4930