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Do I need to use an insolvency practitioner to liquidate?

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What is the role of an insolvency practitioner in liquidation?

If your company is insolvent – or you are worried it could soon become insolvent – you have an obligation as a director to ensure the interests of your creditors are prioritised and that you do everything within your power to minimise any further potential losses. You can ensure you are adhering to these responsibilities by enlisting the help of a licensed insolvency practitioner at the early signs of your company experiencing financial difficulties.

What is an insolvency practitioner?

An insolvency practitioner is a qualified and licensed professional who is able to give advice on matters of company insolvency and financial distress. They will also be able to act on behalf of your company if it is determined that the company needs to enter a formal insolvency process.

Depending on the financial position of the business, and your desire to continue trading, there are a range of business rescue and recovery options that can be considered. However, it the situation has reached a level which makes a turnaround unlikely, your insolvency practitioner may advise you to place the company into liquidation using a process known as a Creditors’ Voluntary Liquidation (CVL).

What does it mean to liquidate a company?

A CVL is a director-initiated process which brings about the end of an insolvent company in an orderly manner and in line with the Insolvency Act 1986. A CVL can only be entered into under the guidance of a licensed insolvency practitioner, so it is vital you seek expert help and advice if you are considering liquidating your insolvent company.

Worried about your Bounce Back Loan?

If you are a limited company director worried about how you are going to repay your Bounce Back Loan, we are here to help. As licensed insolvency practitioners we can talk you through your options when it comes to repaying your outstanding Bounce Back Loan, as well as handling all negotiations with creditors on your behalf. Call our team today on 0800 063 9262 .

What is the role of an insolvency practitioner in liquidation?

When a company enters liquidation, the appointed insolvency practitioner will be tasked with identifying all assets belonging to the company, before having these independently valued, and then sold for the best price possible; this is known as ‘liquidating’ company assets. The proceeds realised through this act will be used to repay outstanding creditors as far as possible according to a designated hierarchy depending on creditor status. The insolvency practitioner will handle this whole process, as well as liaising with creditors throughout.

Once assets have been liquidated, and available distributions have been made, the company will then be formally dissolved and its name removed from the register of companies held at Companies House.

What happens after liquidation?

Once the company has been liquidated, it ceases to exist as a legal entity. This means that any money owed by the company which remains unpaid will be written off. Unless directors have provided a personal guarantee for any borrowing, creditors cannot chase you personally for payment, nor do you have any obligation to use personal funds to repay company debts.

Director redundancy and liquidation

When your company is liquidated all staff will be dismissed and their roles will no longer exist. Due to this, employees will be eligible to claim redundancy as long as they meet the qualification criteria. As the company is insolvent and therefore unable to afford to pay the redundancy owed to staff, claims will instead be made to the Redundancy Payments Service, a government body. 

As the director of an insolvent company, it is likely you too will have a valid claim for redundancy once the company enters liquidation. This is because many directors are also classed as employees of the company and paid accordingly through PAYE. Your insolvency practitioner will be able to talk you through your potential right to redundancy and will point you in the right direction when it comes to claiming what you are entitled to.

Start your online liquidation today

If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.

How UK Liquidators can help

At UK Liquidators we have some of the most experienced insolvency practitioners ready and waiting to help you and your company navigate financially turbulent times. If your issues are caused by cash flow problems, falling sales, increasing operating costs, or a combination of all three, we can help.

We can talk you through your options and help you understand the positives and any potential drawbacks of each solution before advising you on the most appropriate next step based on your individual circumstances. If it is determined that a formal insolvency process is the best solution, we will be with you every step of the way and will deal with creditors on your behalf.

To take the first step, contact our expert team today on 0808 253 5757 for immediate help and advice, or to arrange a free no-obligation consultation with your local UK Liquidators licensed insolvency practitioner.

Jonathan Munnery
Insolvency & Restructuring Expert

If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.

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Did you know?
Are you eligible to claim Director Redundancy?
As a Limited Company Director you may be entitled to claim Director Redundancy - Average UK claim is £9,000*.
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Contact the UK Liquidators Team

If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.

  • Free initial consultation
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