There are a number of ways to close your limited company if it is insolvent.
First however you must check to see if your company is actually insolvent as without actually ascertaining that you will not be able to proceed any further.
There are two basic tests.
- Are your liabilities greater than your assets.
- Can you pay your debts as and when they fall due.
If you can make out these tests then your company is insolvent.
Next you need to decide what it is that you wish to accomplish. If you want to close your company and not trade again then a company liquidation could be your solution. This can be achieved in two ways you can either wait for a creditor to present a winding up petition or of the company owes you money, you can present your own petition. This is known as a compulsory liquidation.
A more common route is to ask an Insolvency Practitioner to call a meeting of your creditors at which you will propose to wind up the company. This is called a creditors voluntary liquidation or CVL.
In order to do this, you need, under the supervision of the Insolvency Practitioner, to prepare a statement of affairs. This sets out your assets and liabilities, income and expenditure. It will show your losses and how you have come to be in this position.
It will make it clear on the statement that there is no chance of the company surviving and that it must be closed down.
Some creditors will turn up at the meeting, and may ask some questions. The whole process from preparing the initial statement of affairs, and calling the meeting, to holding the meeting will take about three weeks.
As you can se it is not a complicated process to close down a company, but if you do wish to take the favoured CVL route you will need to engage a n Insolvency Practitioner. The usual fee for preparing and hosting the CVL and undertaking the winding up work is about £5,000. This is usually paid out of the assets of the Limited Company. There are many Insolvency Practitioners around and it is always a good idea to speak to a couple before settling on one.
Information provided by Steve Thatcher of Help With Debt (UK) Limited and total debt solutions company.
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