What are the Implications of Liquidating My Insolvent Company?
Let’s start with the most obvious; once the decision has been taken to liquidate the company then trading should cease within the company. This means that the bank account will be frozen by the bank as soon as they are notified of the CVL.
This doesn’t necessarily mean that the business that traded within the company must also come to an end. If you’re interested in re-starting your business following on from Creditors’ Voluntary Liquidation give us a call and we will tell you how to carry on without fear of breaching insolvency legislation.
It is likely that your employees may need to be made redundant, though they will most likely have claims against the government redundancy payments office for unpaid statutory payments due to the employees. We will assist with explaining these claims to the employees and assisting with completion of the necessary paperwork to make such claims.
There are no personal implications on your credit rating as an individual as the company is a separate entity and therefore responsible for its own debts. The only reason this would affect your own personal finances would be if you have given a personal guarantee to a creditor of the company.
There are potential disqualification implications should the liquidator identify any actions of wrongful or fraudulent trading, preferences, transaction at undervalue or misfeasance in your duty as a Director. We will explain what all there are to you when we speak or meet up.
The department for Business Innovation and Skills may take the decision to disqualify you or ask you to sign an undertaking so you cannot be a Director for between 2 and 15 years. Again we will give you guidance if there are any obvious areas of risk.
When liquidating your company you may decide to start a new company carrying out the same activity with a same name or a name which is similar. Section 216, of the Insolvency Act 1986, states that if you have been a Director of a company which has been placed into insolvent liquidation, you are restricted from using the same name or a name so similar to suggest an association for a period of 5 years.
There are, however, some exceptions to this, the first one being that you purchase the whole or substantially the whole of the assets of the company. All other routes to avoid this can be discussed with you by contacting one of the insolvency practitioners at FA Simms.