If you have chosen to close your limited company, you may need the services of a liquidator – also known as a Licensed Insolvency Practitioner. This is a highly specialist area and you may be uncertain about how to find someone who is suitably qualified and able to assist with your particular circumstances.
Find a Reliable Insolvency Practitioner
A recommendation can be useful and your accountant or solicitor may be able to suggest an insolvency practitioner who they believe is suitable for your needs. But, this is an important decision and you should not just take a recommendation at face value. You should only appoint them as liquidators after making some basic checks yourself and if you are satisfied with their experience and qualifications.
Alternatively, you can make your own searches and then check out that they are on the government’s Insolvency Service directory – GOV.UK “Find an insolvency practitioner” in addition to asking them questions to ensure they will be a.good fit to work with you.
Does my Insolvency Practitioner Need to be Local?
Many meetings now take place via platforms such as Zoom or Teams – this is often more than adequate. If you feel it is essential, then they will often agree to meet with you on a face-to-face basis – if this is required – and will travel to your premises if you are based in the UK. So, a local office is often unnecessary, because much of the work can be handled remotely. What matters is that the liquidator has an understanding of your needs and is appropriately qualified.
What Should I Look for in a Liquidator?
You should ensure that the liquidator specialises in corporate insolvency rather than personal insolvency. They should hold a license and have passed the JIEB examinations, which ensures they are a fit and proper people to work as a practitioner.
Beware of any individual or company that uses the term ‘insolvency practitioner’ but is not qualified or a member of a professional body such as the Insolvency Practitioners Association (IPA), the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants in Scotland (ICAS) or the Institute of Chartered Accountants in Ireland – CARB (ICAI).
Insolvency practitioners are subject to regular inspections by their licensing body and this will ensure you are dealing with some who are qualified, up to date in their learning, and regulated.
Check out too if they are a specialist in your particular business sector and if they choose to focus on SMEs or on large organisations. All these factors are far more important than local presence.
When do you Need to Find an Insolvency Practitioner?
It is always helpful to speak to a licensed insolvency practitioner at an early stage – so in the case of financial difficulty, this should be before creditors are threatening legal action. You should also be aware that an insolvency practitioner will be able to advise on matters outside of liquidation, so this would mean rescue options such as a Company Voluntary Arrangement or administration.
How can an IP Help me?
An MVL is a formal process used to bring a solvent limited company to a close – this means it can pay all its due taxes and creditors and a sworn declaration must be made by directors to this effect. The liquidator will realise the company’s assets, settle debts and distribute any surpluses to directors.
An. MVL will be chosen when there are more significant assets to distribute as in this case, there can be tax advantages that the liquidator can advise and oversee, in terms of Business Asset Distribution Relief. If not, but the business remains solvent, then a straightforward dissolution – LEGISLATION “Apply to strike off” – (also known as a striking off) is most suitable and you do not need a liquidator for this.
A CVL is a commonly used procedure that is chosen by directors when a business is insolvent. The liquidator will take over the running of the business but remain in contact with the directors. They will deal with creditors and seek to repay them where possible from the realisation of assets and bring the business to an orderly closure.
A CVL will be selected often because other rescue measures have been explored but are deemed unworkable and there is no other way forward. The liquidator will liaise with creditors and deal with claims, keeping all parties informed and dealing with them in the correct priority as laid down in the Insolvency Act 1986 – LEGISLATION “Insolvency Act 1986” )). They will ensure assets are independently valued, marketed, and sold.
They will also deal with employees, assisting in the redundancy process and advising them on how to make claims for statutory redundancy pay.
Directors must always be aware of the risks of trading while knowingly insolvent – this is known as wrongful trading – and it can result in being personally liable for debts. A liquidator is also obliged under the law to investigate any actions taken by directors and those who held the role within the last three years. This is to ensure they acted within the law – if not, they could face prosecution and disqualification from acting as a director. In most cases, directors will not be found to have acted improperly and at the end of the CVL, they will be free to restart another business if they wish to do this.
If you are the director of a UK business and are looking for advice from a liquidator, Company Debt is highly experienced across many sectors. To find out more, please contact a member of our specialist team for an informal and no-obligation discussion.
All Company Debt insolvency content is written by our licensed insolvency practitioners.
The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.
You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy here.