Liquidation has a reputation for being a wholly negative thing, however, that’s often not the case. Indeed, company liquidation does not always have to be negative at all. Many companies which are completely solvent and trading may to wish to wind up for a number of reasons, and the most common course of action is members’ voluntary liquidation. While this is largely a stress free process with the right kind of support and guidance from a licensed liquidation practitioner, it isn’t the quickest way to wind up a solvent company.
To get things moving a little quicker, some directors may apply to have their company struck off the business register at Companies House. This a simple process involving the submission of a form and a small fee, and there are some criteria that your business must meet in order to qualify;
Firstly, your business must NOT have traded within the past three months of applying to be struck off.
- The company must not have changed its name in the past three months.
- Your company MUST be solvent and not have any pending legal proceedings/court cases.
- You must not have entered into any agreements with creditors or members regarding repayments yet.
Providing the above rings true for you business, opting to strike off the register instead of members’ voluntary liquidation may seem like a faster way of wrapping things up if you have other projects you’d like to move onto. But there are some rather severe drawbacks which should be considered before you jump in head first.
Why not choose this over members’ voluntary liquidation?
There are two main disadvantages to striking off which make the process of voluntary liquidation seem a lot safer and more hassle-free. If you choose to strike off, creditors are allowed to apply for the company to be restored and they can instigate compulsory liquidation against the directors within 20 years. Also, any remaining assets in the company are claimed by the Treasury Solicitor has owner-less property – this, combined with the fee you pay to be struck off the register, does not make for a very attractive proposition.
By speaking to a professional liquidation team and instigating members’ voluntary liquidation, creditors only have a total of 2 years in which to apply to have the company restored and your assets are dissolved and spread among your shareholders and creditors.
Regardless of your situation, or simple you may think things are, it’s wise to discuss every avenue available with a licensed insolvency practitioner before you make any rash decisions. It may be that there is a better option available than the one you’re taking and it’s in your interests to weigh up every pro and con.