Published: 16/11/2021 By Jane PriceIn a liquidation of a company the assets are collected and sold by the appointed Insolvency Practitioner (IP). The proceeds are used to pay creditors, in a specific order i.e.
- Fixed charge creditors from fixed charge assets
- Expenses of the liquidation
- Liquidators fee
- Preferential creditors
- Prescribed part
- Floating charge creditors
- Unsecured creditors
- Interest to unsecured and preferential creditors
Before a voluntary liquidation, an IP may help directors meet legal duties such as calling meetings of shareholders and seeking a decision from creditors.
If a business is solvent, it may be wound-up in a members’ voluntary liquidation (MVL). For this to happen it must be possible to pay all creditors in full, with statutory interest, if applicable. An IP must still be appointed liquidator who will then help take the director through the process of an MVL.
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