Liquidate My Company
Are you thinking about liquidating your company? There are multiple reasons why you might be finding yourself in this position. Perhaps your company is facing serious financial challenges, or maybe the future of your business looks uncertain. You might just want to close your business. Whatever the reason behind potentially liquidating your company, the first step should be getting in touch with our team at Bridge Newland. Our specialist team of experienced insolvency professionals will be able to support you throughout the entire process, advising you as to what decision is best for you and your company.
What happens when you liquidate your company?
When you liquidate your company it will usually mean that your business will stop trading and the powers of the directors will cease. At this point, the directors will be replaced by a professional Liquidator, who must be a licensed Insolvency Practitioner – like ours at Bridge Newland. The liquidation process will then involve realising all business assets in order to repay creditors. This will be overseen by your appointed licensed Insolvency Practitioner.
There are three main types of liquidation:
At Bridge Newland, we recognise and understand that every business is different. The financial position of your business is unique to you, and it is important that you make decisions depending on your individual circumstances. The experts at Bridge Newland will be able to support you, so you know you are choosing the right route for your company. Get in touch with our team today.
Do you need a licensed liquidation specialist?
In short, yes and we would advise getting in contact with a licensed Insolvency Practitioner as early as possible. Our Insolvency Practitioners at Bridge Newland are qualified and licensed, which means we are fully equipped to provide the essential advice and support required of your company if you are facing financial difficulties. We will also be able to act on behalf of your company if you need to enter a formal insolvency process.
As tempting as it might be, never try to informally liquidate a company yourself by selling its assets and settling only some of the creditors, as without the support of a licensed Insolvency Practitioner, your business might end up worse off, as no creditor is bound by your proposed terms of settlement and each can commence legal actions as a result. Get in touch with the team at Bridge Newland.
How do you liquidate your company?
Due to Insolvency Rule changes in 2017, there no longer needs to be a physical creditors’ meeting at the start of the liquidation process. However, physical shareholders meetings are often still held and physical creditors meetings are still possible if requested by a certain number/amount of creditors.
With this in mind, here are the typical stages of the liquidation process:
If the Directors of the Company suspect that the Company is insolvent, or if they believe it could benefit from specialist advice from a licensed insolvency practitioner, the director’s should act swiftly to make contact with Bridge Newland Limited whom can provide initial advice for no cost. This advice can be over the phone, by videocall or at a physical enquiry meeting. The Company’s accountant or any advisors to the Company can also be present in these discussions if preferred given their knowledge of the financial position of the Company.
Our experienced insolvency staff will review all options available and will provide detailed advice on the best solution for your Company.
- Engagement & Director’s Board Meeting
If the advice obtained is that the Company should be placed into Liquidation, assuming that they wish to engage Bridge Newland to administer their liquidation, the Directors and any shareholders with 25% or more of the total shares must firstly provide the nominated liquidator with certified proof of their ID and proof of address and confirm that they are unaware of any conflicts of interest between them and the firm (or its employees) and a full engagement letter is then drafted and signed which formally engages Bridge Newland.
Bridge Newland then draft all formal documents for signing which includes a board minute between the directors that resolves the various actions required to commence the liquidation with the most important resolutions being to agree to wind up the Company and to propose a liquidation to act. A majority of the directors must agree to these resolutions for them to be valid.
- Shareholders Decisions
Once the Directors have engaged Bridge Newland and resolved to nominate a liquidator the Shareholders must then agree these proposals by calling a decision procedure to sign off the same resolutions. This is usually done by post using a process called “a written resolution process” meaning that the paperwork is drafted and sent to all shareholders with a formal notice of the resolutions being sought and a voting form. This voting form must then be sent to the nominated liquidator by no later than the decision day, which is a date set for all these resolutions to be considered. A physical meeting can also be held to do these actions but this is now rare.
Where votes are taken by post via the written resolutions process (and not at a physical meeting) the shareholders typically nominate one of them to be responsible for dating all the votes as they are generally best to remain undated until the creditors pass their resolutions in order to avoid the liquidator being appointed by the shareholders but not by the creditors should some creditors object to the nominated liquidator’s appointment.
The key thing to remember here is that in order to pass the resolution to wind up the Company (to place it into Liquidation), consent to the resolution to wind up must be received from shareholders that equal 75% or more of the total issued (voting) shares.
- Creditors Decisions
With the voluntary Liquidation process, creditors must also agree that the Company should be wound up and who should be appointed as the Liquidator in order for the resolutions to be passed. However, a physical vote from a creditor is no longer required as creditors can be considered to have approved the resolutions if sufficient creditors don’t object to the proposals or if sufficient creditors haven’t requested a physical meeting to be held to consider the resolutions. This automatic process is called the deemed consent process.
Like the shareholders, creditors are given notice of a decision date and the resolutions being proposed and but this time it is considered that the resolutions have been passed automatically when the decision date has passed if the requisite number or value of creditors haven’t objected or requested a physical meeting in the required timeframe.
If it is considered necessary, a virtual meeting process can be used to pass the creditor resolutions. This is usually done where there is a risk that all creditors are not known so the intention to hold a meeting to consider the resolutions is advertised to catch any missing creditors, or where creditors are likely to have questions which they need answers to in order to decide how they wish to vote on the proposals. However, this is rarely required due to the detailed information provided to creditors by this office at the outset and our availability to answer questions if required.
Once the creditor and shareholder decisions have been passed. The Company is considered to be in Liquidation and the nominated liquidator then becomes the Liquidator, duly appointed. The liquidator will then inform all members and creditors of their appointment and if not already done, will look to realise all of the assets in a bid to then make dividends to creditors as much as can be afforded from the funds realised form these sales and or collections made from debtors and refunds etc.
If the realisations made are insufficient to pay all creditors in full, together with the fees and expenses of the liquidation, the shortfall to creditors is written off unless the creditors have a personal guarantee whereby they will seek to recover their shortfalls from the guarantor/s.
Is your company facing liquidation? Get in touch with Bridge Newland
At Bridge Newland, we recognise that the idea of liquidation can feel overwhelming, stressful and confusing. Our professional team of liquidation specialists are here to support you every step of the way. We support businesses from across the UK, including Rugby, Birmingham and London.
Get in touch with our team of professional, licensed Insolvency Practitioners, and we can discuss your options.