Liquidation
When the Company reaches the end of its life, or becomes insolvent, one of the options open to it is to be formally wound up by a liquidation process.
Liquidation is a process by which the assets of a company are realised and the proceeds distributed to the creditors and members in the order of priority as determined by company legislation.
Liquidations may be voluntary or compulsory (under court management following petition to the court). Voluntary liquidations may be a members’ liquidation or a creditors’ liquidation. The former implies solvency, the latter implies insolvency.
There are three types of liquidations:
- Court liquidations
- Creditor’s voluntary liquidations
- Members voluntary liquidations
1. Court Liquidations
A Court Liquidation is a means by which creditors of a company determine that it can no longer continue to trade and have a liquidator appointed. This process can be initiated by creditors sometimes against the will of the shareholders of the company. It can also be used by shareholders or company directors. In order to have a company placed in a court liquidation a petition must be made to the High Court.
2. Creditors Voluntary Liquidations
Creditors Voluntary Liquidations are initiated by the directors where a company is insolvent. The liquidator’s appointment is confirmed at a subsequent meeting of the creditors. In a Creditors’ Voluntary Liquidation, the liquidator is primarily concerned with the interest of the creditors.
3. Members Voluntary Liquidations
Where the life of a company is to be brought to an end, and that company is solvent, a ‘Members Voluntary Liquidation’ is the most often used approach. The members are the ones who control the winding-up, and not the creditors. As all creditors will be paid in full, they have no interest in how the winding-up is conducted. It is, therefore, the members who appoint a liquidator and he then lays his annual and final accounts before members only.
We can provide the following services:
- Assist the company in meeting the procedural requirements for placing it in liquidation.
- Accept appointment as liquidator of a company and dealing with the realisation of assets, the payment of creditors and finalising the company’s affairs.