Liquidation

 

When a Company is formally Wound Up it is referred to as being in liquidation.

There are three types of liquidation being Compulsory Liquidation, Creditors Voluntary Liquidation and Members Voluntary Liquidation. In most cases a Company is put into liquidation by a creditor, the Directors or the Shareholders as a result of financial difficulties or a dispute by Shareholders.

Where a creditor wishes to takes steps to liquidate a Company, reference should be made to Creditor Services.

In other instances, the form of liquidation appropriate to the circumstances of any given Company will be suggested to the Directors and, if necessary, to the Shareholders, and, the processes in each of the forms of liquidation duly explained.

In general, the procedure is as follows:- 

A Liquidator is appointed.

The assets are realised by the Liquidator. 

The Liquidator adjudicates on creditors claims.

Creditors receive dividends based on available funds.

Shareholders receive a return based on surplus funds.

The Liquidation is brought to a close and the Company is formally Dissolved.

The foregoing is a very simplified summary of the characteristics of every Liquidation but in addition to these core characteristics, the Liquidator will be required to carry out a myriad of tasks inclusive of the following:-

All dealings with creditors inclusive of summoning meetings of creditors and reporting to them on the administration of the Liquidation.

Reporting to the Insolvency Service on the Conduct of the Directors pre  liquidation.

Carrying out appropriate investigations into the Company's intromissions pre Liquidation. 

Compliance with all Statutory and Regulatory obligations.

The Directors cease to have any executive powers relative to the administration of the Company after it has been liquidated and thereafter have an obligation to co-operate fully with the Liquidator and to comply with their statutory obligations. 

All of the foregoing will be fully explained to Directors or Shareholders at any Consultation held. If the liquidation follows on from the presentation of a petition for the Winding Up of the Company by a creditor, the Liquidator will write to the Directors advising of the foregoing in more detail.