If you decide to close down your company it is sometimes difficult to understand how to go about doing it.
The correct process is likely to be determined upon whether the company is solvent (i.e. able to pay all its liabilities) or not.
It is important to note that you do not always need to use an insolvency process to close down a company. If you have a dormant company or one that has simply come to the end of its life with no assets or liabilities, you can apply to the Registrar of Companies directly for the company to be dissolved.
If your company has assets or liabilities, the next step is to determine if the company is solvent or not. If you like some guidance to understand which route is correct for your business, please contact us.
MEMBERS' VOLUNTARY LIQUIDATION (MVL)
Otherwise referred to as a solvent liquidation, a Members Voluntary Liquidation is a process utilised by a company that can pay it's debts in full and facilitate a distribution of funds to shareholders in the most tax efficient manner. Follow the link to understand - why is a MVL is more tax efficient?
The Members Voluntary Liquidation process is often used as an exit strategy for retiring shareholders, or simply as an assurance that the company has been closed properly with no loose ends. For more information on Members Voluntary Liquidations please click here.
CREDITORS' VOLUNTARY LIQUIDATION (CVL)
A Creditors Voluntary Liquidation is a voluntary process initiated by the directors and shareholders of a company having recognised that the company cannot pay its liabilities as they fall due, i.e. insolvent.
For more information regarding the Creditors Voluntary Liquidation process, including frequently asked questions, please click here.
COMPULSORY WINDING UP
On some occasions a stakeholder of a company (usually a creditor) can apply to Court for a company to be wound up. This involves serving a winding up petition on the company and a Court hearing date will be agreed.
If a winding up order is granted at the hearing, the company immediately enters a liquidation process administered by the Official Receiver. If you have either received or been threatened with a winding up order please call us to discuss your options.
There are key differences and implication between a compulsory liquidation and a creditors voluntary liquidation (CVL). Click here, for more details.