What is the difference between dissolving and liquidating a company
A Winding Up Petition is submitted to the court by a creditor of a company who has failed to collect the debts that they are owed.
If this petition is granted by the court, the company will then be investigated and liquidated by the Official Receiver.
Should anything be deemed false on the declaration, the legal consequences can be quite severe.
Utilising the services of a licensed Insolvency Practitioner (IP), the directors can draw up the necessary documents in which they swear that the company is, indeed, solvent and can be expected to have the financial ability to pay debts within a 12 month period of the expected liquidation date.
The Declaration is first sworn in the presence of a solicitor and then filed with Companies House.
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.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.Only a professional Insolvency Practitioner (IP) is qualified to liquidate a company’s assets due to the complicated and specific nature of UK law and the variables involved. Understanding which one applies to you is extremely important.The two main types are: If you are unable to pay your creditors.
Find out everything you need to know about liquidating a limited company.