When a company is no longer required the cheapest and quickest way is to use the informal strike off route. This involves making a request to Companies House to have the name removed from their register. If no objections are received it will bring an end to the limited company.

However, strike off is intended for solvent companies and as such it is not suitable if you have an outstanding Bounce Back Loan.

In the circumstances, if you have an outstanding Bounce Back Loan which you cannot repay, strike off is not an option and to close the company you will need to use the formal liquidation process.

Creditors Voluntary Liquidation:
A director led process for limited companies which are Insolvent e.g., are unable to pay their debts as and when they fall due.

Members Voluntary Liquidation
Used by directors/shareholders to extract funds from a solvent company in a tax-efficient manner.

Administration
A process used mainly to rescue the business of an insolvent company.

Company Voluntary Arrangement
An alternative process to creditors voluntary liquidation designed to enable a company to continue to trade whilst its debts are frozen and repaid (partially or in full) over typically a five-year period.

Not if you have acted in the best interests of the company and its creditors – unless you have provided a personal guarantee to any of your creditors.

The liquidator has a duty to investigate directors conduct and report their findings to a government department.  If any wrongdoing is found, you may be disqualified from acting as a company director for a period of time. However, we see very few disqualifications in practice. Also, you may in exceptional circumstances, be asked to contribute towards the liabilities of the company.

If the company owes you money, you will be an unsecured creditor of the company.

Employees made redundant, as a result of insolvency,  are entitled to payments from the Insolvency Service (a government department).

A director can also be an employee and eligible for payment but will need to provide evidence that they were an employee, to the Insolvency Service .

The Insolvency Service will then decide whether there was a contract of employment in place at the time and if the director is eligible.

The liquidator has a duty to report on the conduct of directors to the Department for Business Energy and Industrial Strategy (“BDEIS”). If they see fit, they may seek to disqualify you from acting as a company director. However, in practice, we see very few disqualifications.

A winding up petition is a legal document enforceable by the Courts and should not be ignored.  If you do nothing the company is likely to be wound up by the Court and a government official “The Official Receiver” appointed as liquidator.

If you do receive a statutory demand or a winding up petition you should seek professional advice from a licensed insolvency practitioner (such as our firm) immediately.

No.  It is, however, possible to acquire the business assets and company name from the liquidator but there are restrictions, and you should always seek professional advice to ensure you do not fall foul of the insolvency legislation in this area.

Honesty is often the best policy and if you have engaged us you may wish to advise them accordingly.  We will be writing to your creditors, within a matter of weeks, in any event.

If you are experiencing cash flow problems within your business we advise, first and foremost, that you seek professional insolvency advice from a licensed insolvency practitioner – such as ourselves at Easy Liquidation.

When a company is insolvent it is the responsibility of directors to take action to ensure that the company does not incur any further debts and to protect the interests of creditors. The first step should be to discuss the position with a firm of licensed insolvency practitioners, such as Easy Liquidation.

A limited company is a separate legal entity to its directors and shareholders and, as such, they are not usually personally liable for its debts. There are, however, exceptions where you may be liable – examples of which are as follows:

Wrongful trading - by continuing to incur losses after the company became insolvent, directors might be guilty of wrongful trading and potentially liable to repay a proportion of its debts.

Personal Guarantees - if, as a director, you have signed a personal guarantee you may become personally liable for any shortfall the creditor suffers (under that guarantee) should the company be liquidated. Where a guarantee has been signed by more than one guarantor, each of the guarantors will be ‘jointly and severally’ liable – i.e., all the guarantors are equally liable for the whole debt.

Overdrawn director loan account - directors of insolvent companies often have an overdrawn loan account within their company. If this is the case at the point of liquidation, the liquidator will examine the situation and put forward settlement proposals. If the director is unable to settle their loan, the liquidator may consider legal proceedings for repayment.

All the above put your home at risk and we suggest you seek professional advice from us as early as possible.