“What does winding up a limited company mean? How can I wind up a business?”
Winding Up a Limited Company UK
Essentially, winding up a limited company is just another way of saying you are liquidating your limited company but the term ‘winding up’ is more commonly linked to when a creditor is winding up a company. When considering liquidating a limited company in the UK you should first establish whether your company is solvent or insolvent. Have a look at our ‘What is Insolvency’ page to find out.
Winding Up a Solvent Company
If your limited company is solvent and you want to wind up a company then you should consider a members’ voluntary liquidation. This is relevant when liquidating a company voluntarily, as long as it does not have any debts and a declaration must be signed verifying this fact. We have specialist tax consultants who can provide appropriate tax advice on a member’s voluntary liquidation and the tax can often be reduced to 10%.
More often than not, however, a director will seek help when a creditor is threatening winding up of their company and so the bulk of this section will therefore deal with these scenarios. Generally there are two different types of insolvent liquidation and they are:
- Compulsory Liquidation (via Winding Up Petition)
- Creditors’ Voluntary Liquidation
Winding Up an Insolvent Company Voluntarily
If your company is insolvent and cannot afford to pay the bills on time then you may want to consider a creditors’ voluntary liquidation for your company. As a limited company is a legal entity in its self the debts belong to the limited company not the officers of the company (directors) unless personal guarantees have been signed. The winding up of a limited company allows the debts to be liquidated along with the company once finally struck off the company register.
When learning how to wind up a limited company the situation can be tricky as directors can leave themselves open to attack by creditors if they make the wrong move. In some cases, engaging an insolvency practitioner as your first port of call could be the worst thing you could possibly do. This is explained more on the Insolvency Practitioners UK page. If you wish to speak to a specialist who can help you with a creditors’ voluntary liquidation and winding up a limited company voluntarily call 08000 746 757; or email firstname.lastname@example.org.
Compulsory Liquidation of an Insolvent Company with a ‘Winding Up Petition’
Limited company liquidation takes an even more serious turn if you have received a winding up petition or winding up order against your company. If you have received a winding up petition or a winding up order against your company then please seek advice as soon as you can. A winding up petition means that a creditor is trying to force your business into liquidation and you will lose control of the situation once the Official Receiver has been appointed. In fact the director/s will start to lose control once the winding up petition is advertised in the government’s insolvency register (The Gazette). The company bank account will very likely be frozen and company assets cannot be moved or sold so we recommend seeking help when threatened with a winding up petition. It is worth remembering that one of your creditors has taken the time, trouble and expense to discover how to wind up a limited company.
The limited company liquidation will be forced via the winding up petition presented to the court and will end in a winding up order and subsequent compulsory liquidation of the company. A compulsory liquidation of the company should be avoided in most cases due to the inherent risks involved in this form of limited company liquidation.
In essence the director has a legal duty to close the company appropriately for example a creditors’ voluntary liquidation would be regarded as appropriate whereas a compulsory winding up of the company is a forced liquidation so regarded as inappropriate.
We are very experienced at fighting winding up petitions and we have been successful in doing so and in the majority of cases we can usually rescue the business if not the company.
Knowing who to trust can be hard when considering winding up a limited company so make sure you read through our testimonials page and if necessary, we can also arrange for you to speak with some of our previous clients as further testament to our limited company winding up services.
Prefer to talk? Speak with one of our specialist team members today on 08000 746 757; or use the live support facility at the bottom of the page to get an answer fast about winding up a company. Alternatively, you can contact senior turnaround practitioner Mike Smith on 07912 344 394.
Written By: Mike Smith