Company liquidation is the process whereby the assets of the company are realised and distributed among its creditors according to their legal priority and entitlement.
Liquidation may occur following a receivership or administration. Alternatively, the company’s directors or shareholders may recommend that the company be put directly into liquidation via either a Creditors Voluntary Liquidation (CVL) or a Members Voluntary Liquidation (MVL) or a Court can make a winding up order for a compulsory liquidation on the petition of a creditor or the company itself.
For insolvent companies there are two main types of liquidation:
- in a Creditors´ Voluntary Liquidation (CVL) the directors pass a resolution to wind the company up. A creditors' meeting is held to nominate the appointment of a liquidator and consider a statement of affairs.
- in a Compulsory liquidation creditor’s petition to the court for the company to be wound up.
Within six months of a company being put into liquidation, the Insolvency Practitioner has a duty to report to the Department of Trade & Industry (DTI) on the conduct of any director of an insolvent company who has been a director within 3 years from the date of insolvency. This could lead to prosecution and disqualification.
For further detail on the debt options for limited companies see:
Or for debt options for sole traders and partnerships click here.