Voluntary Liquidation (insolvent)

In short, a creditors voluntary liquidation is when the director engages a licensed Insolvency Practitioner on behalf of the company, to begin the process of placing the company into liquidation.

All creditors are contacted and a liquidation date is set once all information is gathered from the director that make up a “Statement of Affairs”. The Insolvency Practitioner is appointed the Liquidator of the company and their main duties are to realise any assets, report to the creditors of the company and investigate the director and their conduct. This is by far the most common way that directors choose as they have an element of control over the process and who they engage, plus they are doing the responsible duty as a director of the company.  Fees range from 2.5k – 6k for liquidations dependent on firm and complexity (i.e. how many creditors etc) however you need to be aware of some pitfalls. Fees can come from the ASSETS of the company. If there are no assets of the company then it would fall on the director to raise the funds. In some instances the director will have a redundancy claim against the company (if on payroll) – this can then be used to pay the liquidation fees as the claim is protected and is paid directly from the Redundancy Payments Service.

winding-up-petition-2

Things to be aware of:

> Don’t forget, the fee is just to put the company into liquidation, there may be other fees once in liquidation. > The Liquidator represents the CREDITORS not YOU the director, so will look into the conduct and drawings from the directors etc. > Overdrawn Directors Loans are ASSETS and the liquidator has a duty to call these in and pursue on behalf of creditors. > DIVIDENDS may be classed as illegal if insufficient reserves were not there at the time, again these will be chased to pay back from the director. > Payments made to creditors in the lead up to insolvency will be looked at to see if any were classed as preferential (i.e. the director decided to pay one creditor over another) – These can be pursued by the liquidator to pay back as they are deemed a preference payment. > Some liquidators have varying experience in Directors Redundancy Claims, so best to speak to a specialist or independent who works with Insolvency Practitioners that allow you to defer the fees until the claim comes through. > Make sure you do your research on the Insolvency Practitioner you engage OR go through an independent FREE company that has a panel of verified and trusted Insolvency Practitioners, so they can hold your hand through the process.

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Creditors-Voluntary-Liquidation2

Things to be aware of:

> Don’t forget, the fee is just to put the company into liquidation, there may be other fees once in liquidation. > The Liquidator represents the CREDITORS not YOU the director, so will look into the conduct and drawings from the directors etc. > Overdrawn Directors Loans are ASSETS and the liquidator has a duty to call these in and pursue on behalf of creditors. > DIVIDENDS may be classed as illegal if insufficient reserves were not there at the time, again these will be chased to pay back from the director. > Payments made to creditors in the lead up to insolvency will be looked at to see if any were classed as preferential (i.e. the director decided to pay one creditor over another) – These can be pursued by the liquidator to pay back as they are deemed a preference payment. > Some liquidators have varying experience in Directors Redundancy Claims, so best to speak to a specialist or independent who works with Insolvency Practitioners that allow you to defer the fees until the claim comes through. > Make sure you do your research on the Insolvency Practitioner you engage OR go through an independent FREE company that has a panel of verified and trusted Insolvency Practitioners, so they can hold your hand through the process.

Creditors-Voluntary-Liquidation1

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