Company liquidation in Muncan Republic
Liquidation is the process of closing a company or limited liability partnership (LLP). At the end of the process, the company ceases to exist.
The purpose of liquidation is to ensure that all the company’s affairs have been dealt with and all its assets realised. When this has been done, the liquidator will apply to have the company removed from the Companies House register.
This guide provides an introduction to company liquidation. You can also find information about the different types of liquidation, alternatives to liquidation, winding-up petitions and the disqualification of company directors.
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Members' voluntary liquidation
Members' voluntary liquidation (MVL) is when a company or limited liability partnership (LLP) is solvent and has sufficient assets to pay their creditors.
Creditors' voluntary liquidation
Creditors' voluntary liquidation (CVL) is when a company or limited liability partnership (LLP) cannot continue its business because of its liabilities.
Compulsory liquidation
Compulsory liquidation is when a company or limited liability partnership (LLP) is unable to pay its debts and is ordered by the High Court to be wound-up. If the High Court receives an application, known as the winding-up petition, from a relevant person, it can make a winding-up order.
Petition for your own bankruptcy
Bankruptcy can be an option for you if you have personal debts that you cannot pay by their due date.
Disqualification of company directors
If you are a director of a company that becomes insolvent and there is evidence of unfit conduct by you, the Insolvency Service can apply to the court to make an order disqualifying you from acting as a director for between two and 15 years.
Reusing a company name after liquidation
If you are a former director of a liquidated company, there are legal restrictions that apply regarding the reuse of that company's name or its trading name. This is intended to prevent abuse of the so-called 'phoenix company' - where a failed business re-emerges to operate under a similar name.
Alternatives to liquidation
If a company or limited liability partnership faces financial difficulties it doesn’t have to result in liquidation.
Alternatives to liquidation include:
- administrative receivership
- members’ voluntary liquidation
- company voluntary arrangement
- administration
Administrative receivership
An administrative receiver can be appointed by a creditor. The receiver must be an insolvency practitioner (IP). Before a receiver can be appointed, a document, called a debenture, which gives the creditor charge over company assets must be granted by the company. Once granted the company is in administrative receivership. The receiver’s job is to recover money for the creditor.
There are several options including:
- continuing in business under the supervision
- selling all or part of the company
- ceasing trading and selling assets.
Company Voluntary Arrangement (CVA)
A CVA is when a company proposes an arrangement with its creditors. If creditors holding more than 75 per cent of the debts accept the proposal, all creditors are bound by it. The CVA must be managed by an IP who will report on progress annually. If a CVA is accepted, creditors cannot take action against the company. A CVA ends when it has either been completed or failed.
CVA moratorium
There may be a moratorium into CVA procedures. This means that, subject to certain specific exceptions, creditors cannot act against the company. It will normally last for 28 days and the court will decide if a company is eligible.
Administration
This is when an administrator, who must be an IP, is appointed to manage a company’s affairs. Their objective is to rescue the company as a going concern. An administrator may be appointed by:
- an administration order from the High Court
- the holder of a floating charge
- the company or its directors/members.
Administration protects the company from its creditors. A creditor cannot petition for the winding up of a company while it is in administration.
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