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Corporate Insolvency

Understanding  Liquidation For UK Companies

Liquidation is a commonly used term to describe the formal closure of a company which is insolvent and has creditors that cannot be paid from business assets or cash flow. More formally known as a Creditors Voluntary Liquidation (CVL) this is the most frequently used way of liquidating a business. Sometimes the terms Company or Corporate Voluntary Liquidation are used to describe the CVL insolvency procedure.

One of the key benefits of owning a limited liability company or partnership is that if there is a major downturn in trading – you can, as a last resort, liquidate your business and start afresh. The business is a separate legal entity and the business owners are actually employed by the company – even if they are the shareholders. So the business can be closed and the directors, subject to fulfilling their own obligations, can start afresh if they choose.

 A business can be liquidated even if it is still solvent through a mechanism known as a Members Voluntary Liquidation but more than 90% of the business liquidation enquiries we receive relate to insolvent company liquidations.

Even if your business has been subject to a Winding Up Petition from a creditor seeking payment and you are thinking of simply allowing a Compulsory Liquidation to take place, then you should still contact us for immediate advice because a compulsory Liquidation can have serious implications for you.

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