The procedure for a Members' Voluntary Liquidation is fairly straightforward. The directors of the company swear a Statutory Declaration of Solvency to the effect that the company is able to pay all its liabilities in full within 12 months. A meeting of the shareholders is convened in order to pass a winding-up resolution and appoint a Liquidator.

The duly appointed Liquidator then realises the company's assets, pays all creditors together with statutory interest and returns any surplus money to shareholders.

A Creditors’ Voluntary Liquidation is an insolvent Liquidation where the assets owned by the company are insufficient to pay creditors in full.

Again, the procedure is fairly straightforward. The directors instigate the process by convening meetings of shareholders and creditors. At the shareholders’ meeting a resolution is passed to wind-up the company and appoint a Liquidator. A creditors’ meeting follows immediately after the shareholders’ meeting where creditors may then, if they so wish, put forward an alternative nomination for Liquidator which is then subject to a vote.

Please note that even if entering liquidation isn’t the most suitable way out of your financial difficulties then we are still able to help. We deal with company debts of all types and can assist with business recovery, administration, receivership, etc.

Compulsory Liquidation is instigated by the Court, usually on the petition of a creditor or a shareholder. There are grounds upon which the Court can make a winding-up order, the most usual being that the company is insolvent.

Upon the making of the winding-up order, the Official Receiver becomes the Liquidator of the company. If appropriate, the Official Receiver will seek to appoint an Insolvency Practitioner as Liquidator in his place, either at a meeting of creditors or upon application to the Secretary of State.

The Liquidators’ duty is to realise a company's assets and distribute the proceeds to creditors.

The Insolvency Practitioners at Jones Giles & Clay can act as Liquidator during your compulsory liquidation.

If it is deemed that you have acted in a proper and reasonable manner in the period running up to the Liquidation then Liquidation should have minimal effect on you personally. A limited liability company means that, as a director, your personal liability for business debt is small or non-existent.

If however, you have signed personal guarantees in respect of any of the company debts, then you may be liable for those debts. If it can be proven there was ‘wrongful trading’ in the period running up to the Liquidation, then your personal risk will be increased. You may have also borrowed personally to put money into the business, and if your on-going income is at risk this may lead to personal as well as corporate insolvency issues. There are a number of personal insolvency solutions available to you – including an Individual Voluntary Arrangement or Debt Management Programme.

If your company is struggling then we can offer you advice and guidance on how to minimise any risk to you personally. It is vital that you take early advice so contact us now on 029 2035 1490.

A director may be held responsible for wrongfully trading a company in the period running up to the insolvency of a company if:

• Further debt is incurred when there was no reasonable prospect of the company recovering from its difficulties
• Money rightfully due to HM Revenue & Customs being used to fund on-going trading activities when there was no reasonable prospect of recovery
• Taking large salaries which the business cannot afford