FAQs

How do I Liquidate a Solvent Company?
  • Confirm your limited company has net assets over £25,000. Below this amount it may be possible, to strike off (dissolve) the company as a cheaper alternative.
  • Call a Shareholders Meeting to vote on the winding up of the company.
  • Engage the services of an Insolvency Practitioner (liquidator) You cannot liquidate your company without a licensed IP.
  • The liquidator will assist with the preparation of a Declaration of Solvency. This is an official document, signed by the company directors, stating that the company can repay any debts (including interest) within a 12-month period. It includes a full breakdown of assets and liabilities and must be made before a solicitor of commissioner of oaths, before being filed at Companies House.
  • The IP will liquidate any company assets and deliver the proceeds to the company members.
What if I Can’t Afford the Cost of the Liquidator?
Some company directors who wish to close their company fear that without the money to pay an insolvency practitioner they will not be able to complete the process. The first thing to mention is that liquidator’s fees are taken from the realisation of assets so, assuming the company has some assets in addition to its debts, you would be able to proceed with using a firm of insolvency practitioners. They are legally entitled to take their agreed fee from the sale of company assets as a preferential creditor. The second point is that if you don’t initiate a liquidation for fear of the costs, you will then be in a position of waiting for your creditor (often HMRC) to compulsorily wind you up. In this scenario, company directors have less control over the process and outcome, since the creditors will appoint their own insolvency practitioner.
How Long do Companies Stay in Liquidation?
Most liquidations take at least a year from start to finish, with some taking longer if there are significant assets.

Appointing a liquidator (insolvency practitioner) takes just one or two weeks. Approving the liquidation itself takes approximately 3 months, but since the IP’s job is to get the best return for creditors it takes significantly longer to assess the company situation, value and sell any assets, and distribute the proceeds accordingly.