CREDITORS VOLUNTARY LIQUIDATION

Creditors Voluntary Liquidations are the most common form of liquidation in the UK. Generally, the company is out of cash, cannot pay debts and the businesses is no longer perceived as viable.

The directors of the insolvent company will call an extraordinary general meeting and a meeting of creditors. An advertisement is placed in The London Gazette and local press and will write to creditors to submit a claim for their debts. At the members meeting, the directors will report that the company is insolvent and will advise that the company should enter Liquidation voluntarily and pass a resolution to cease trading and appoint a Liquidator. At the subsequent creditors meeting, the directors place the statement of affairs before the creditors who then confirm the appointment of a Liquidator.

The Liquidator has four main tasks:

1. To realise the assets of the business
2. To adjudicate creditors' claims, where appropriate
3. To investigate and report on the conduct of directors
4. To make payments to creditors in order of priority

In some cases the Liquidator is requested to sell the assets of the business to another party, including the former directors or shareholders. This is commonly known as a Phoenix.

Phoenixism is perfectly legal provided that the rules are observed and the Liquidator optimises the interests of creditors before assets are sold to any third party.

To discuss Creditors Voluntary Liquidations call Philip Wood on 01782 713700.