Key Facts On Liquidation relates to insolvent Liquidaton.
What Do You Need To Liquidate – Key Facts
Companies go into Liquidation not individuals. Individuals go into Bankruptcy; an entirely different type of insolvency procedure.
Liquidation is an insolvency procedure controlled by the Insolvency Act 1986.
You cannot liquidate a company without a Liquidator. That person must be a Licensed Insolvency Practitioner.
How To Liquidate Your Company – Key Facts
You can start the process to liquidate your company by the Director passing a Board Resolution that the company is to go into Liquidation.
A meeting of the shareholders is then convened to pass a Special Resolution that the company is to be wound up. You need 75% of the relevant voting shareholders to pass the Special Resolution.
The shareholders can appoint a Liquidator but this then later needs to be confirmed by a decision of the creditors.
If you cannot pass the Special Resolution then the Directors may need to consider Compulsory Liquidation as an alternative procedure, in which the company is wound up by way of a Court Order.
Information To Creditors To Liquidate
To go into insolvent liquidation without a Court Order is known as Creditors Voluntary Liquidation. Information must be presented to the creditors when they seek to appoint a Liquidator.
To appoint a Liquidator the creditors may either confirm the one appointed by the shareholders or appoint another one at a procedure which is known as a Decision. A Decision is a procedure enabling creditors to vote on the liquidator’s appointment and potentially also the basis of their remuneration.
There is information required by the regulatory standard known as Statement of Insolvency Practice Number 6 that must be provided to creditors in advance of the Decision.
In particular, the recent trading history and circumstances of the company’s failure needs to be explained. In addition, recent accounting information and an up to date financial position of the company known as a Statement of Affairs is also required. A Statement of Affairs is a bit like a breakup basis balance sheet, showing the assets and liabilities in some detail.
This is a quick key facts on liquidation with reference to insolvent liquidation. If you are thinking about liquidating your company and would like a call to discuss how Oliver Elliot can help, please call us on 0203 925 3613, or email us at contact@oliverelliot.co.uk.
