A company liquidation is the process of winding up a company’s affairs in an orderly manner so that its assets can be distributed fairly to creditors were required and it’s structures dismantled. UK company liquidation, where appropriate investigations would also be carried out to determine if there is any wrongdoing that should be pursued. This is, in contrast, to simply sell a business where the business structure itself remains intact.
In the United Kingdom, the Corporations Act defines the powers and functions of a liquidator. A liquidator is appointed at the start of a company liquidation to manage and carry out the winding up of a company ensuring that assets are collected and all claims are settled before the company is dissolved. Directors must comply and cooperate with the liquidator at all times and make available the company’s financial records and details of all relevant business affairs. Failure to comply with the requests of the liquidator will invoke the offense provisions of the Corporations Act.
While liquidation can be a troublesome procedure for a few organizations, there are benefits of the liquidation process. One of the fundamental favorable circumstances is that every one of those engaged with the organization will have the capacity to push ahead once the procedure is done. Organizations that enter a Members Voluntary Liquidation will find that the procedure closes significantly snappier instead of a Creditors Voluntary Liquidation, which frequently takes longer because of a full examination of the organization being completed.
A Creditors Voluntary Liquidation additionally has a few focal points. Amid this procedure, the outlet is more included, implying that organization executives are free from the problem from lenders. While numerous organization executives disdain the vendor assuming control over the organization, others may feel assuaged that the organization’s obligation issues are being tackled.
A liquidator’s responsibilities include seeking out, protecting and realizing the assets of the company. Investigations into the financial affairs of the company will be conducted in order to uncover any potentially illegal or dishonest behaviour. When the investigations are complete, reports will be sent to the creditors and to the ASIC. After realizing the assets and recovering any money that is owed to the company distributions will be made to creditors and if there is anything left over, to shareholders. Once all of these tasks have been completed the liquidator will apply for de-registration of the company.
Can a company trade while being wound up?
In theory, yes, however most often the company will have closed or have been sold prior to liquidation. The decision to continue trading is at the discretion of the liquidator who will do so if continued trading will result in an improved outcome for the creditors and members. If trading is continued it may do so for a time determined by the liquidator.
How long does the liquidation process last?
There is no set time limit for the UK company liquidation. The liquidator will act in the most efficient manner possible to recover assets and money, to carry out its investigations and to make distributions as required.
When does the liquidation process end?
The UK company liquidation process ends when the company is struck off the companies register by the ASIC when a court sets aside or stays the winding up processor when the company is dissolved by a court order after application by the liquidator.