Company Liquidation
If your business is in debt, company liquidation is not inevitable. Suitable Debt Solutions can help identify alternatives so you can stay in business.
The most common reason for company liquidation is that a business is in financial trouble and cannot pay its debts. In such a case, voluntary or compulsory company liquidation may take place, after which the company ceases to exist.
Company Liquidation – a quick guide
The courts are not usually involved in cases of voluntary company liquidation. In this instance, the directors or partners (referred to as the “members”) of the company make a resolution to voluntarily wind-up their affairs. The company will usually cease trading at that time. If it is solvent, the company liquidation will then proceed as a “members’ voluntary liquidation”; if not, a “creditors voluntary liquidation” will take place.
In cases of compulsory company liquidation, a petition is made to a Court to wind-up the company; this often occurs when a company cannot pay its creditors, although creditors must attempt to recover debts by other means first. Debt is not the only grounds for applying for company liquidation; others include situations where the company no longer appears to be viable, perhaps due to changes in ownership or fluctuations in the marketplace, or where company liquidation is used as part of the restructuring of a group of companies.
How to avoid Company Liquidation
Where debt is involved, company liquidation should be seen very much as a last resort. There are alternatives to help companies in debt, such as a restructuring plan or Company Voluntary Arrangement, and all these avenues should be considered first.
The best thing that a company in debt can do is seek professional advice. A debt counselling service such as that offered by Suitable Debt Solutions can help a company to explore all the available avenues and put together a debt recovery package that will avoid company liquidation. It is in everyone’s best interests that a company continues trading; employees keep their jobs, suppliers are paid and keep customers and customers maintain continuity of supply.
When Company Liquidation is inevitable
After exploring all other avenues, sometimes company liquidation is the only way forward. In this case, the company will require the services of a licensed insolvency practitioner. Suitable Debt Solutions can support a company through every step of the procedure and ensure the best possible outcome for the company concerned.
