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How to liquidate your nursery business

Nurseries play a hugely important part in the economy and are a lifeline for many parents. However, despite their crucial role, chronic underinvestment and wider economic challenges have left the childcare sector in crisis and sent nursery closure rates soaring.

If you run a nursery and are struggling to make ends meet, you’ll probably be confused about what to do next, but we can help. Our licensed Insolvency Practitioners will discuss your challenges with you, assess your financial position and explore every avenue to save your nursery. We can also advise you on the right way to liquidate your nursery if it’s no longer viable.

Why are nurseries struggling?

Nursery closures have increased by 50% over the last year, with government funding leaving many childcare providers short, and rising food and energy costs taking their toll. There’s also a serious recruitment and retention problem in the sector, with nurseries having to increase their pay to attract and keep the high-quality staff they need to meet the rising demand for childcare. 

The result is that many nurseries are either only just breaking even or operating at a loss. Some are reducing the number of places they offer just to get by, while others are raising their fees substantially when the finances of many families are already at breaking point. 

If your nursery is in debt or no longer profitable, you should seek help at your earliest opportunity. There might be relatively simple steps you can take to turn your nursery around. On the other hand, if your nursery cannot be saved, we can advise you on your Company Liquidation options.  

Liquidation advice for nurseries 

In many cases, it’s possible to rescue a struggling business. That’s particularly true in the childcare sector, where there’s no shortage of demand for your services. However, if your company cannot pay its debts when they fall due (it’s insolvent) and you’re facing endless creditor pressure and threats of legal action, liquidation could be in everyone’s best interests. 

Entering into liquidation voluntarily via a Creditors’ Voluntary Liquidation (CVL) allows you to close your nursery while fulfilling your legal duties as a company director. You can determine when to close the nursery and choose an Insolvency Practitioner to act on your behalf. They will value and sell the nursery’s assets to repay your creditors as much as possible. The nursery will then be struck off the register at Companies House and any remaining debts will be written off.

One benefit of closing your nursery via a Creditors’ Voluntary Liquidation is that you could be eligible for director’s redundancy pay. That could provide a lump sum, typically around £10,000, to help you overcome the initial financial upheaval caused by the closure of your business. 

Business rescue options for your nursery

Company Liquidation is always a last resort. If your nursery can be saved and it is in the best interests of you and your creditors, we can help you explore the various options that are available. 

If you’re struggling with cash flow but your underlying business model is still viable, there might be alternative funding streams that can give you a quick cash injection. Alternatively, if you’re unable to pay tax bills or other debts, we can help you make a Time to Pay arrangement with HMRC or negotiate an informal debt repayment agreement with your creditors. 

If you are facing threats of legal action from your creditors, a Company Voluntary Arrangement (CVA) could be a better option. It allows you to repay your debts over time while continuing to trade and prevents creditors from taking action against you. You could also consider Company Administration, which allows the business to be restructured and returned to profitability, or sold as a going concern to preserve the nursery’s value and employment. 

Is liquidation right for your nursery?

If you believe liquidation is the right approach for your nursery or you want to discuss your company rescue options, we can help. Contact our licensed Insolvency Practitioners for a free, same-day consultation or arrange a meeting at one of our 100+ offices throughout the UK.

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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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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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.

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