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On liquidating a

Bankruptcy is only relevant to an individual, partner, or sole trader and not a limited company.When you are considering liquidating a company due to financial problems, take the time to compare all of the available options.The company is struck-off the registrar of companies and this is known as dissolution, which is the final stage of the liquidation process.There are two voluntary liquidation procedures and one compulsory procedure.The procedure will be handled differently for a compulsory liquidation that it would be dealt with in a voluntary liquidation, so the following information is just a broad overview of the process.

The liquidator will remain in office until all of their responsibilities have been addressed.The voluntary procedures, which are initiated by the shareholders and directors are explained in more detail below and the compulsory procedure, which is usually initiated by creditors like HMRC via a court order, is also covered.Compulsory liquidation is usually initiated by a creditor that is looking to force a company into closure via a court order.One of the biggest creditors to petition the Court is HMRC when taxes are owed and government believes the company to be irreparably insolvent.Members Voluntary Liquidation – When a company is solvent and able to pay outstanding debt, a Members Voluntary Liquidation (MVL) can be commenced. Creditors Voluntary Liquidation –,’ the first word is actually Creditors.It should be apparent by this point that the liquidation process will be entirely dependent upon the type of liquidation being commenced.Again in a CVL as for an MVL there is no court involvement in the process. Remember, the only time a petition is presented is when the liquidation is a compulsory liquidation.Whilst there are two main types of liquidation, voluntary liquidation does not involve the court whereas compulsory liquidation a court process where a petition to wind up the company is presented.A synopsis of each is as follows: Compulsory Liquidation – In this case, creditors petition the Court to liquidate the company because they believe it to be insolvent and incapable of paying its debts.The procedure is usually handled by the Official Receiver, or an appointed Insolvency Practitioner.Therefore, this is not a voluntary process for directors.


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