Published: 20/11/2018At turpin barker armstrong we regularly speak to directors and shareholders of companies which are in financial difficulties and they will often admit that the thought of the liquidation of their company triggers negative emotions, panic and fear, and this is only because they did not know the facts regarding the liquidation process. They were afraid that they may be liable for a Company’s debts and this process will have a dramatic impact on their personal life and credit score
Therefore our Polish Insolvency Administrator, Sylwia Starzynska, decided to summarise some interesting facts about the Creditors Voluntary Liquidation process in the UK in simple terms.
What is Creditors' Voluntary Liquidation (“CVL”)
A CVL is a process which enables Directors to formally close an insolvent company. Usually, a company goes into CVL after its directors realise that its liabilities exceed its assets or it cannot pay its debts as they fall due and so the company cannot carry on its business.
Did you know that:
- Directors’ are able to nominate their own Liquidator. The Liquidator once appointed, will deal with realising any assets of the company and making distributions to creditors. Once appointed the Liquidator has a duty to act on the best interest of the Company’s creditors.
- Outstanding company debts do not become the director’s personal debts. Obvious exceptions include where a personal guarantee has been provided by the director.
- Directors of a limited company are not automatically made personally bankrupt.
- Disqualification of the director does not automatically occur when their company is placed into liquidation
- Re-using a company or business name is possible but it is important to seek legal advice on the position to ensure that you meet all requirements and comply with the law.
- Company assets can be purchased by a connected party, such as a director, but any sale is conducted transparently, at fair value and without prejudicing the interests of other interested parties.
- Employees who were made redundant due to the CVL are entitled to submit claims for outstanding wages, holiday, and redundancy and notice pay to the Redundancy Payments Service.
- Leases can be disclaimed by the Liquidator.
- Liquidator deals with the creditors.
It is important that directors’ take advice at an early stage as they need to understand their responsibilities as directors of an insolvent company.
If you or your client are experiencing financial difficulties or they are being chased by suppliers or HMRC for payments and you feel pressure, please contact us for a free consultation on 020 8661 7878 or by e-mail email@example.com
Don’t forget that Sylwia can also explain all available options in Polish!