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- Striking off the company – While this is the easiest and cheapest option, striking the company off from the Companies Register is subject to certain conditions. You can strike it off if you have not:
- traded or sold off any stock or goods in the last three months;
- changed names in the last three months; or
- been threatened with liquidation and have no other impeding creditor agreements.
- Members’ voluntary liquidation – This may be a more suitable option where you no longer want to operate your business, but you need to liquidate assets or pay off any debts. Usually, a declaration of solvency would need to be filed and this would include details of the company’s assets and liabilities, and it would need to be signed by the majority of directors. Other corporate formalities such as general meetings, issuing resolutions and making them public will also need to be attended to. In order for the liquidation to take effect, an authorised insolvency practitioner will need to be appointed as a liquidator. This is something we are experienced in assisting with.
- Creditors’ voluntary liquidation – When a company is unable to pay its debts, the company directors may want to maintain some degree of control and choose to liquidate the company rather than wait for creditors to force a compulsory liquidation. Under a creditors’ voluntary liquidation, a determination needs to be made as to whether the company is cash flow insolvent (i.e. the business cannot meet its liabilities when they become due) or balance sheet insolvent (i.e. the business liabilities outweigh its assets). The advantage of choosing voluntary liquidation before the creditors instigate liquidation is that directors can choose their own liquidator and while assets will usually be used to pay off debts, the aim will be to minimise creditor losses rather than eliminate them completely. Similar to a members’ voluntary liquidation, there are corporate resolutions, filings and announcements that will need to be completed beforehand.
- Compulsory liquidation – If a company has accumulated debts exceeding £750, shareholders can agree to the directors applying to the court for a winding up order. This route involves more resolutions, completion of a winding up petition, public announcements and fees for both the courts and legal representation at hearings. However, compulsory liquidation is often initiated by creditors who have not been paid. Once this happens, company directors will end up with very little control over the liquidation process and protecting the creditors will become the priority.
- filing any due accounts;
- serving any notices on leases, utilities, subscriptions;
- termination of employee contracts;
- consider if trademarks need to be relinquished;
- pay out any shareholder or director expenses;
- update all corporate housekeeping; and
- keep records for six years