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The starting point for any company liquidation is determining exactly how company liquidation or insolvency proceedings are initiated and what is going to be involved. How much is this going to cost and how long is the process going to take.

As an initial point of reference Companies House offers guidance on corporate voluntary arrangement, liquidation, receivership, and administration as well as giving general information on insolvency. For most directors we strongly recommend taking professional advice going ahead with any of these proceedings that are discussed on the Companies House website. The professional service most suited to this area of the law is an insolvency practitioner.

General Company Liquidation Guidelines

First and foremost most people want to know what the difference between a voluntary and a compulsory liquidation constitutes. Broadly speaking a voluntary liquidation (which can be either a members’ voluntary liquidation or a creditors’ voluntary liquidation) is brought about by resolution of the company and is usually conducted by an insolvency practitioner.

A compulsory liquidation is brought about by an order of the court and can be conducted by the Official Receiver or a qualified practitioner. Frequent asked questions that most people wish to know is whether the people responsible for insolvency proceedings hold should any kind of qualification. Anyone undertaking the duties of liquidator, administrative receiver, administrator or supervisor of a corporate voluntary arrangement should be a qualified insolvency practitioner. Those holding the position of receiver or manager do not need this qualification, nor does anyone who was already in office before the Insolvency Act 1986 (for England, Wales and Scotland).

Do insolvency proceedings mean the company is insolvent and whether it will eventually be removed from Register? This is not always the case. In a members’ voluntary liquidation, the directors of the company swear a statement, known as a ‘declaration of solvency’, to agree that the company will be able to pay all its debts within a period of twelve months or less.

Specifically in the aforementioned circumstance the company is not classified as ‘insolvent’. Another key question that is asked time and again is whether a dissolved company can remain on the Register and whether dissolution can be deferred.

In answer to this is that unfortunately the Registrar cannot defer the dissolution which follows a liquidation proceeding. In some cases involving voluntary liquidation, an application can be sent to the court to defer dissolution. For compulsory liquidation, an application would need to be send, by an Insolvency Practitioner, to the Secretary of State in England and Wales, or the Department for Trade, Enterprise and Investment in Northern Ireland. In Scotland, any application to be sent must be made to the court to defer the date of dissolution. The deferral notice/order must be filed with the Registrar following the registration of the concluding documentation in the liquidation and before the date of dissolution. Once dissolution takes place, you will have to apply to the court to have the dissolution declared void.

For more information please click our accredited Insolvency Practitioner link in the interactive portal above. The link will put you in direct contact with the professional service you require and has been independently verified by Bankruptcy.co.uk.