What is the difference between dissolving and liquidating a company dotnetnukedating com
Find out everything you need to know about liquidating a limited company.
When the decision is made to dissolve a company it is important to comply with all the indispensable requirements.
One of the first steps in liquidating a company is the directors’ resolution.
This is of particular importance if a company is seeking a Members Voluntary Liquidation as the directors will be asked to sign a Declaration of Solvency.
Once all long-term relationships have been severed and obligations have been dealt with, the business’ assets are liquidated (sold) and according to UK law, this must be handled by a licensed Insolvency Practitioner. If the business is solvent and all debts are satisfied, the proceeds are distributed among members.
If the company is insolvent, the top priority is paying off creditors even if there is nothing left to be distributed to members.
Whilst it is true that some of a company’s assets may be liquidated during the winding up stage, it is usual for such things as equipment and the building and/or land to be liquidated once winding up is complete. Once you have decided to go ahead with liquidating a company, you need to be aware that there are two main types of voluntary liquidation.
A CVL is quite similar to an MVL in terms of timings, schedule and statutory filings, but the emphasis throughout a CVL is on the creditors.
However, after all the assets have been liquidated and creditors repaid, there may be nothing left to distribute to shareholders.
Should anything be deemed false on the declaration, the legal consequences can be quite severe.