“My company has no money and no bank account — can I just walk away?” is the question we hear constantly. The short answer is no. The longer answer is the one that matters: if you walk away without a formal procedure, you expose yourself to a different set of problems that often cost more than liquidation itself. A company without assets can still be liquidated.
You can fund the procedure yourself, claim Director Redundancy via the Redundancy Payments Service, or accept a creditor petition into compulsory liquidation. The formal process closes off the wrongful trading exposure, the 2021 Act direct investigation window, and the disqualification proceedings that follow doing nothing.
Below, we walk through the three funding routes for a no-asset CVL, what the liquidator investigates even where there is nothing to recover (the answer: everything), and the personal liability exposure routes that operate independent of your company’s asset position.
The “Director Redundancy as found funding” route is the one most SME directors never hear about until it’s too late to claim. We see it work for directors with documented PAYE history more often than not.
A company with no assets and no bank account can still be liquidated, through three formal routes:
Creditors’ Voluntary Liquidation (CVL) under s.84 IA 1986; director-initiated, IP funded by director or via Director Redundancy claim.
Strike-off (DS01) under s.1003 CA 2006; only if no debts, dormant 3+ months, HMRC cleared. NOT safe with any outstanding debt.
Compulsory liquidation under s.122(1)(f) IA 1986; creditor-initiated, no direct director cost, but Schedule 1 CDDA 1986 conduct review wider.
The cheapest legitimate route for an insolvent no-asset company is a CVL funded by the director (£4-7k) or by a Director Redundancy claim through the Redundancy Payments Service (£8-20k typical payout).
Doing nothing is not “free”; it routes the case to compulsory liquidation, broader investigation, and likely director disqualification under the Schedule 1 CDDA 1986 conduct framework.
Why You Still Need a Formal Process
Three legal exposures explain why “walking away” is not an option:
Wrongful trading under section 214 IA 1986. If the company continues to trade or incur new liabilities after the point at which liquidation was no longer reasonably avoidable, the director faces a contribution-order claim regardless of how empty the company’s bank account is by the end.
The liquidator can pursue the contribution personally against the director; the order operates on director assets, not company assets.
Disqualification under section 6 CDDA 1986. Ranges from 2 to 15 years; Schedule 1 conduct factors include ignored insolvency, trading while unable to pay, failure to keep records, and tax delinquency. The disqualification proceeding does not depend on company assets; it depends on conduct.
Direct investigation under the 2021 Act. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 gave the Insolvency Service direct power to investigate dissolved companies without restoration, for 3 years from the dissolution date.
Striking off a company with debts outstanding (especially BBL outstanding) routes the case to this investigation almost automatically.
None of these exposures go away by ignoring the company. They get worse. The formal liquidation process closes them off through orderly, IP-supervised investigation; which is materially better than the alternatives for most directors.
Can You Just Strike Off the Company?
Strike-off under section 1003 of the Companies Act 2006 is the cheapest formal route (£33 filing fee), but its eligibility is narrow:
If any of these conditions fail, strike-off is not safe. The 2-month Gazette objection window allows HMRC and other creditors to object; and they routinely do. HMRC’s automatic objection process tracks every DS01 filing and matches it against tax-debt records.
The Bounce Back Loan flag is particularly dangerous. BBL outstanding + strike-off attempt almost guarantees an Insolvency Service investigation under the 2021 Act, with disqualification probability in the 60-80% range based on the BBL Audit Programme’s published outcomes. Over 1,500 directors have been disqualified for BBL-related conduct through this route.
For a company with debts that cannot be paid, strike-off is not an option. CVL is.
CVL With No Assets: How It Works
Creditors’ Voluntary Liquidation under s.84 IA 1986 is the standard route for insolvent SMEs. The process for a no-asset case:
Director instructs an IP for the diagnostic call (free) and CVL preparation.
Shareholder special resolution to wind up the company under s.84 IA 1986.
Director prepares Statement of Affairs (Form 4.19) within 7 days of resolution under s.99 IA 1986. The SOA is sworn; false declaration is criminal under s.99(3) IA 1986, with imprisonment up to 7 years.
Creditors’ decision procedure under r.6.14 of the Insolvency Rules 2016; virtual meeting, correspondence, or electronic vote. Creditors confirm IP appointment or substitute their preferred IP.
Liquidator assumes control from appointment date. Director’s powers cease under s.103 IA 1986.
Investigation and dissolution; typically 4-12 weeks to dissolution for a clean no-asset case.
The IP cannot accept appointment without funding for their work. £4-7k is the typical SME CVL fee under SIP 9 (Statement of Insolvency Practice 9) disclosed time-cost schedule. Where the company has nothing, the funding has to come from somewhere else.
Who Pays for Liquidation When There Is No Money?
Three legitimate funding sources for a no-asset CVL:
Director personal funding. £4-7k upfront, paid into the IP’s client account before appointment. The director recovers nothing back unless the liquidator finds assets during investigation that exceed the fee. This is the most common route for owner-managed SMEs with no recoverable estate.
Director Redundancy via RPS. The Redundancy Payments Service pays statutory entitlements where the company cannot; and directors often qualify as employees under section 230 + section 155 of the Employment Rights Act 1996.
The leading authority is Secretary of State for Trade and Industry v Bottrill [1999] ICR 592: 50%+ shareholding does not automatically disqualify; the test is fact-specific against contract + PAYE history + active operational role + 2+ years continuous employment.
The RPS payout typically covers:
Statutory redundancy (£700/week × age multiplier × years, max 20 years = £21,000 maximum)
8 weeks arrears wages
6 weeks holiday pay
1-12 weeks statutory notice
Total: typically £8,000-£20,000 for a director with 5-15 years’ continuous service. This often covers the IP fee + leaves the director with a recovery.
Third-party funding. Family members, business partners, or connected creditors can fund the IP fee. This is legitimate provided documented as a third-party payment (not a preference under s.239 IA 1986). Creditor-funded CVL is sometimes negotiated where a major creditor sees commercial benefit in faster resolution.
The Director’s Contribution
In our practice, the “director’s contribution” to fund the liquidation is a routine, legitimate mechanism. We hold your contribution in our client account; appointment formalises once SOA is filed and creditors have completed the decision procedure.
It is NOT a preference under section 239 IA 1986 because you receive no benefit; you are paying for your company’s insolvency procedure, not for your personal advantage. The “desire to prefer” test from Re MC Bacon Ltd [1990] BCLC 324 does not apply: you are paying out of your personal funds, not extracting value from the company.
Some IPs (us included where appropriate) structure the contribution as a “refundable arrangement”: if the liquidator recovers more than the fee from unexpected sources (deposit refunds, late customer payments, recovered preferences), we return the surplus to you. This is rare in clean no-asset cases but not unusual where the picture is uncertain at appointment.
The contribution can be paid by cheque, bank transfer, or signed payment promise. The IP’s client account must hold cleared funds before appointment can be effected.
What the Liquidator Investigates, Even With No Assets
The absence of assets does not reduce the liquidator’s investigation scope. Section 235 of the Insolvency Act 1986 imposes a cooperation duty on directors regardless of company financial position. Section 236 IA 1986 gives the liquidator a private examination power; directors can be summoned, under oath, to answer questions about company affairs.
The s.7A CDDA 1986 D-Report is filed on every director within 3 months of appointment. No-asset cases produce the same conduct review as asset-rich cases; the review covers Schedule 1 CDDA 1986 conduct factors:
Tax delinquency (HMRC arrears, late returns, failed TTPs)
Trading while insolvent
Failure to keep records under s.388 CA 2006
Failure to file accounts at Companies House
Transactions at undervalue (s.238 IA 1986)
Preferences (s.239 IA 1986)
Misfeasance (s.212 IA 1986)
Wrongful trading (s.214 IA 1986)
BBL misuse (added since 2021)
Where investigation finds personal-liability evidence, the liquidator can pursue contribution orders + misfeasance claims even where the company itself has no assets; because these orders operate against the director’s personal assets. £30k-500k+ contribution orders are not unusual on no-asset cases where the trading-on period was extended.
Two routes regularly catch directors of no-asset companies:
Personal Guarantees. Any PG you have signed is a separate personal contract with the lender, unaffected by your company’s liquidation. Once the company estate closes, the bank (or commercial lender) typically writes to you within weeks demanding payment.
PGs survive indefinitely until limitation runs under the Limitation Act 1980: 6 years for simple contract PGs (s.5), 12 years for PGs in deed form (s.8). Part-payment or written acknowledgement restarts the clock under s.29-30.
Etridge protocol (Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44) provides protection for spouse co-guarantors: where the spouse co-signed and the lender did not insist on independent legal advice, the PG against the spouse may be set aside. This is a common defence route for cross-collateralised PGs that exposed the family home.
Overdrawn Director’s Loan Account. If you took more out of the company than was lawfully paid through salary or declared dividends, the difference is a director loan you owe to the company. Section 455 of the Corporation Tax Act 2010 charges 33.75% (from 2023-24) corporation tax on overdrawn DLA at the 9-month mark after your year-end.
The liquidator pursues the DLA balance as a company asset under section 212 IA 1986 (misfeasance) and section 214 IA 1986 (wrongful trading) where the DLA increased during the wrongful-trading window.
Typical settlement: 30-60p in the pound on a properly documented DLA where you cooperate. Disputed DLA proceedings can settle higher or proceed to judgment, and the resulting CCJ enables charging order + Order for Sale against your home.
What Happens to the Outstanding Debts
Once the company is dissolved, three things happen to outstanding debts:
Unsecured company debts are extinguished against the company. Bank facility shortfalls, supplier balances, BBL balances, trade credit; all written off at company level. Creditors update their records and move on.
Secured creditors with charges against specific company assets enforce through those charges. The LPA receiver under section 109 of the Law of Property Act 1925 typically appointed for property mortgages; debenture-holders enforce against the relevant asset class. Where the asset value exceeds the secured debt, surplus flows back to the estate.
Where the asset value is less, the lender’s deficiency converts to an unsecured claim; but the company is being dissolved, so the deficiency effectively becomes a write-off.
Personal Guarantees survive. The PG is between director and lender. Company dissolution does not affect the contract. Lenders enforce PGs within weeks of company estate closing. Settlement is the typical outcome; bank’s commercial calculus on cost-to-recover usually favours a discounted settlement at 30-60p in the pound rather than litigation.
IVA under Part VIII IA 1986 or bankruptcy under Part IX IA 1986 are the personal-insolvency routes for unmanageable PG exposure.
Practical Steps to Liquidate a Company With No Assets
The five-step preparation sequence:
Confirm CVL is the right route. Strike-off only if eligible (no debts + dormant + HMRC cleared); compulsory only if you’re prepared to lose IP choice + face broader investigation.
Gather complete company records. Six categories under s.388 CA 2006 6-year retention: company records, financial records, tax records, employee records, security records, contingent liabilities. The liquidator will need all of them; the IP fee scales with how organised they are when handed over.
Assess Director Redundancy eligibility. Contract of employment + PAYE history + 2+ years continuous service is the threshold. Bottrill fact-specific test applies; 50%+ shareholding does not automatically disqualify.
Take free IP diagnostic call within 14 days. Industry-wide free under s.388 IA 1986 + IPR 2005. Verify the IP on ICAEW (icaew.com/regulation/find-a-firm) or IPA (insolvency-practitioners.org.uk) public register.
Prepare SOA + creditor list. Statement of Affairs (Form 4.19) within 7 days of wind-up resolution. False declaration criminal under s.99(3) IA 1986; never sign blind, never omit contingent liabilities, never undervalue assets.
The “do not strike off” rule is absolute where any debts are outstanding. Gazette objection is automatic from HMRC + bank + key creditors; the case routes to compulsory liquidation or 2021 Act direct investigation.
FAQs on Liquidating a Company With No Assets
Can a company with no money still be liquidated?
Yes; through CVL funded by the director (£4-7k), Director Redundancy via RPS (£8-20k payout typically covers IP fee), or third-party funding (family, connected creditor). Compulsory liquidation is the fallback if no voluntary funding available.
Do I need a company bank account for liquidation?
No. The IP manages the estate from their own client account. Where the company bank account exists but is empty, the IP closes it as part of normal procedure. Where it never existed (rare for trading companies but common for dormant or shell companies), the IP proceeds without it.
What happens to outstanding company debts if there’s no money?
Unsecured debts (bank, suppliers, BBL, trade credit) are extinguished against the company on dissolution. Secured creditors enforce against the relevant asset. PGs survive; bank pursues director personally within weeks of estate closing. Overdrawn DLA pursued by liquidator as company asset.
Am I still personally liable if the company has nothing?
Potentially yes, through routes that operate independent of company assets: PG enforcement, overdrawn DLA recovery, wrongful trading contribution order under s.214 IA 1986, misfeasance under s.212, HMRC PLN under FA 2020 Sch 13. Liability depends on conduct, not on the company’s residual asset position.
How long does a no-asset CVL take?
Typically 4-12 weeks from instruction to dissolution. Clean no-asset cases run faster (4-8 weeks); cases with disputed claims or director loan investigation run longer (8-16 weeks).
