Liquidation
Liquidation is not the only solution for business debts – DCO can explore other avenues allowing your to continue trading.
Liquidation, also known as “winding-up”, is the legal process by which a company’s affairs are brought to an end and the company ceases to exist, usually, but not always, because the company is in some sort of financial difficulty.
There are two types; voluntary and compulsory.
Voluntary Liquidation
Voluntary liquidation occurs when the individuals involved in a business, the directors or partners, agree to wind-up the company’s affairs and cease to trade. Whilst this is a legal process, the Courts are not usually involved. If the company is solvent, the liquidation will proceed as a “members’ voluntary liquidation”; if not, it will proceed as a “creditor's voluntary liquidation”.
Compulsory Liquidation
Compulsory liquidation occurs when an application is made to a Court to have the affairs of a company wound up. There are a number of grounds on which this may occur, including that a company is unable to pay its debts; however, an application is unlikely to succeed if its sole purpose is to enforce a debt.
Can Debt Problems lead to Liquidation?
Liquidating companies, causing job losses and loss of business through the supply chain, is not usually in anyone’s best interests and it is therefore not automatically the case that a company that finds itself in debt will be put into liquidation. There are alternatives available, such as a Company Voluntary Arrangement, which should be considered first; however, in some cases, liquidation is the only option.
How is a company Liquidated?
Whether the liquidation is voluntary or compulsory, there are legal processes to go through to wind up a company’s affairs. A company will require the services of a liquidator or licensed insolvency practitioner such as Debt Consolidation Online.
Where to find help
If your company is in debt and you are considering liquidation, or fear that a third party may make an application for compulsory liquidation, the first thing to do is seek advice about the alternatives available.
Debt Consolidation Online can help you to determine whether liquidation is the best course of action for you, of whether there is another solution. Having made that decision, DCO will help you through the processes and procedures involved to ensure the best possible outcome in the most efficient manner.
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