It is common for HMRC to be in the list of creditors for tax debts including VAT, Corporation Tax and PAYE and directors can often feel intimidated in situations.
Part of the job description of the licensed insolvency practitioner involves communicating directly with the creditors on behalf of the company’s estate.
The settlement of the financial affairs of a business or individual through the sale of all assets and the distribution of the proceeds to creditors, heirs, or other parties with a legal claim.
The voluntary liquidation process gives company directors more control over the course of events, and because CVL’s are done under professional guidance there is less chance of taking action that could lead to wrongful trading accusations.Creditors’ voluntary liquidation may also be a way of preventing aggressive creditor threats such as a winding up petition, and the frozen bank accounts that accompany this.Whatever situation is provoking you to think about liquidating your company, however, you should be aware that it is a very serious process.We suggest you take professional advice at the earliest opportunity.Outside of personally guaranteed debts, this will free directors from the pressure of repayment and allow them to move on to new ventures if they wish.
Legal action against companies is halted after liquidating a business which is another benefit.
There may also be other options available to your company such as a company voluntary arrangement (CVA), or pre-pack administration, depending on the circumstances.
Company insolvency means that the legal duty of directors is no longer to shareholders, but to the creditors.
Aside from the initial cost of arranging a statement of affairs, liquidations generally require little cash flow to undertake since the insolvency practitioners take their fees from monies recovered from the sale of the assets.
Often the amount for liquidating the company is far lower than the amount of debt.
For company directors, the pressure of mounting debt can become overwhelming and extremely stressful, after the debts fall due.