If insolvency is looming, or it’s something you think your company may experience in its lifetime, you’ve no doubt got a host of questions on your mind. It’s difficult to know where to turn or where to start if your business is approaching insolvency, and it’s easy to ignore the signs and potentially land yourself in a spot of trouble. As professional insolvency practitioners, here are a run down of the top five questions we get asked about company insolvency and liquidation processes.
Can I re-use my company name after liquidating the company?
There are incredibly strict rules in place preventing the use of the same company name in 12 months leading up to liquidation, mainly to avoid confusing with creditors chasing up debts. But there are one or two exceptions you’ll discover if you seek some professional advice. So long as all creditors are notified through the proper channels, it is possible to buy back all of the liquidated assets (as well as the brand) from the liquidator. Court permission to re-use the company name can also be applied for but this has very tight rules and time frames. Re-using your company name could help you keep the brand ‘alive’ and carry on trading as normal in the public eye.
After insolvency/liquidation, can I be the director of another limited company in the future?
When your business goes through insolvency or liquidation procedures there will be an investigation into the company’s financial affairs and conduct of the directors. The answer to the above question very much depends on the outcome of this investigation. Appointed liquidators or administrators will carry out the investigation and report to the Department for Business, Innovation and Skills (otherwise known as BIS). If they’re sure you acted well and in good faith, with the interests of your creditors at heart, you have nothing to worry about.
How long does it take to liquidate a company?
Usually, and this is only a guideline, it takes around a month. Once liquidation is declared the company ceases to trade immediately, and a licensed insolvency practitioner will then take the reins and guide the process to its conclusion. You will have little to worry about at this stage.
What will happen to my employees?
This is a common concern of directors whose businesses are approaching liquidation. If you leave it too long and the company gets into dire financial circumstances, it can be impossible to pay your employees. If this is the case they can submit a claim for unpaid wages, holiday or sick pay, redundancy etc to the Redundancy Payments Office which is Government led scheme. You can help on their behalf and the administrator/liquidator in charge might also lend assistance.
I’m sure my company is insolvent – what do I do?
If you’ve looked over your reports and financial records and fear that your company may be insolvent (that is, your debts outweigh your ability to repay them), you need to speak to a licensed insolvency practitioner before you do anything else. It is a legal requirement that a practitioner handle such things, but they will also guide the process for you and take away a lot of the stresses and strains of the decision making process.