After every liquidation process the liquidator is required to investigate all actions taken by the directors while the company was trading insolvently.If it can be shown that the directors did not act in the best interests of creditors then they may be accused of wrongful trading.Although liquidating voluntarily offers a number of advantages, it is important that you also consider the following disadvantages of both forms of liquidation: Liquidating your company voluntarily is more expensive for the directors initially (as they might be asked for a fee) rather than waiting for a creditor or HMRC to force the company into compulsory liquidation.In a compulsory liquidation the cost of issuing a winding up petition (roughly £1,490-£1,990) is covered by the creditor.The up front cost of a typical CVL usually ranges from £3000 to £7000, depending on the insolvency practitioner’s rates and the amount of work involved.However you should be aware that if the company's assets are sufficent to meet these up front costs then the directors should not have to make a personal contribution.For this reason a CVL should be considered as a last resort, only after alternative options that would allow the company to continue trading have been examined (i.e.
Creditors Voluntary Liquidation [CVL] – a creditors voluntary liquidation may be used to close a limited company when a company with debts is unable to pay as they fall due – i.e. In both MVL and CVL procedures to close a limited company a liquidator is appointed to realise the value of the company assets to pay any creditors in accordance with established guidelines and any surplus funds are distributed to the members.
Liquidation is a formal insolvency procedure in which a company is brought to an end; all of its assets are liquidated and the proceeds from the sale of assets is used to repay creditors.
There are two main types of liquidations for insolvent companies– compulsory liquidation and creditor’s voluntary liquidation (CVL).
There are three possible routes to consider when closing a limited company: The voluntary strike off route can be used to close a limited company that has ceased to trade or has never traded and have gross assets and gross liabilities of less than €150.
The voluntary strike off procedure is relatively straightforward and inexpensive and thousands of voluntary strike off’s are performed in Ireland every year.