A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
The Liquidation Process Step by Step
Understanding the liquidation process helps directors know what to expect and cooperate effectively. Here is a typical Creditors' Voluntary Liquidation (CVL) from start to finish.
Step 1: Initial Advice
You speak to a licensed insolvency practitioner, who reviews the company's financial position and confirms whether liquidation is the right route. This initial conversation is free and confidential.
Step 2: Decision to Liquidate
If a CVL is appropriate, the directors resolve to wind up the company. A board meeting is held, and it is resolved to convene meetings of members and creditors to appoint a liquidator.
Step 3: Preparation
The practitioner prepares the necessary documentation, including a Statement of Affairs (a summary of the company's assets and liabilities) and a list of creditors. These are sent to creditors ahead of the meetings.
Step 4: Meetings of Members and Creditors
Two meetings are held, often on the same day and frequently virtually:
- Members' meeting - shareholders resolve to place the company into liquidation and nominate a liquidator.
- Creditors' meeting - creditors vote to confirm the liquidator and may ask questions. The creditors' meeting is the one that matters for the appointment.
Step 5: Liquidator Appointed
Once the liquidator is appointed, they take control of the company. Directors lose control but must cooperate - handing over records, assets, and information.
Step 6: Asset Realisation
The liquidator collects and sells the company's assets, collects book debts, and investigates the company's affairs and the directors' conduct.
Step 7: Agreeing Claims
Creditors submit claims, which the liquidator verifies. Only verified creditors share in any distribution.
Step 8: Distribution
If sufficient funds are realised, the liquidator distributes them to creditors in the statutory order. In many insolvent liquidations, unsecured creditors receive little or nothing.
Step 9: Dissolution
Once the liquidator's work is complete, the company is dissolved and ceases to exist. A final report is sent to creditors.
How Long Does It Take?
The company can enter liquidation within two to four weeks of your first conversation. The full process - realisation, claims, distribution, and dissolution - typically takes 12 to 24 months.
Speak to a Licensed IP
Our Manchester-based practitioners will guide you through each step clearly and honestly. Call us for a free, confidential conversation.