If you find your company is facing any form of financial difficulty and you’re feeling uncertain about what the next steps should be, then you may want to consider the process of liquidation. The team of Business Rescue & Recovery Specialists — Forbes Burton are here to help you with the liquidation process and how it can be enforced.
What Is Company Liquidation?
Liquidation is a procedure where a company is brought to its end, meaning all of the assets are liquidated and all of the proceeds that are earnt from asset sales will then be repaid to the creditors.
This option should only proceed if you know your business can not come back to success and a good financial state.
Here, we are going to provide the steps on how business finance experts can help with the liquidation process if you feel this is the best option for your company.
Step 1
During this time, the directors/shareholders will be furnished with a note of all the information they need. This can include the proof of the business address and identity, and a comprehensive list of creditor details which includes names, addresses and any references that are required. Having all of this information prepared will help make the process a lot quicker and easier.
The finance company you are working with should then check if the directors and any employees are allowed to claim for any redundancy claims. If the answer is yes, then the director can use this to pay for the liquidation process if necessary. However, if there are no funds in the company, then the redundancy money is claimed from the government.
Step 2
Upon receipt of this information, alongside a payment to cover fees (in a case where the company has minimum assets) the documents that are required for the liquidation process will be produced.
Within the documentation, it will include a series of notices calling the shareholder and creditors meetings, where they have agreed to the winding down of the company and arrangement of the meetings, partnered with the decision to appoint an Insolvency Practitioner as the company liquidator.
(Your licensed insolvency practitioner will be able to join you at your first board meeting in person or on the phone. A Statement of Affair may also be included at this point, if required.
Step 3
After this, the liquidator will post out the signed notice to all of your shareholders and creditors to arrange the meeting, alongside this, a 21 clear days notice of the date of the meeting will be necessary for shareholders and at least 7 creditors. However, a shareholder meeting may be held at a shorter notice period if needed.
It is vital that until these meetings are held, you note that you will remain in charge of the company.
Step 4
During this time, before the notices have been sent, but before the meeting, your Liquidator will provide you with advice on ceasing trading, asset sales, redundancy, dealing with creditors, banking arrangements and any other issues that may happen during this period.
You should also be aware that liquidations can be organised in a way that all of the assets may be bought back if desired, otherwise they will be auctioned, any employees may be re-employed if needed and up to the date of the meeting, you can still continue trading if you need to. Keeping your business going during this process is down to the business owner.
Step 5
At this time, the meeting will then be held. At this meeting with the shareholders, they will see if the company has become insolvent and appoint a nominated liquidator. This meeting is commonly held as soon as the members meeting has taken place and during this the creditors confirm the appointment of the chosen liquidator, or they choose one to appoint.
It is obligatory that a minimum of one director and shareholder is present at each meeting — it may also be required that other directors or shareholders provide approval.
Step 6
After the approval has been given, the liquidation process will begin, where at this point the directors’ power will cease.
In any urgent cases and when consent is provided by the shareholders, a members meeting can take place at a short notice.
Typically, a company can be placed into liquidation within one calendar month from first contact. For larger companies it is more realistic that the process will be around a couple of months.
Liquidation is an option that should only be done if you think the process is the right route for your company. It is vital that you research your business finances and see if it can be saved, or if liquidation is the best possible option.
Take the steps you need for your business today, before it’s too late.
