For many directors, the stress of insolvency is further compounded by the notion that they will have to find the money for the liquidation from their own pockets.
This article offers some insight into whether you can liquidate your company cheaply and the best methods for doing so.
We are experts at company liquidation, offering free advice and are happy to have a conversation outlining how we could help in the most cost effective way.
Making the Liquidation Self Funding
The first thing to realise is that liquidations can usually be funded from the sale of company assets. This means the insolvency practitioner will then be paid from the proceeds of the asset realisation, after which creditors will be paid in order of priority.
This means that it is entirely possible for a liquidation to occur without it costing the directors anything, in terms of their personal resources.
If the Assets Aren’t Sufficient, Would Directors Have to Personally Raise the Money?
In the case of a company with minimal or no assets, the good news is that the overall cost is cheaper since complex liquidations take up much more of a liquidator’s time.
Where there are no assets, the process becomes simpler. The Insolvency practitioners will still need to be paid, however, so this is usually found by directors assuming the company coffers are empty.
Cheaper Liquidations Can Be Funded from Directors Redundancy
Another little known fact is that directors of insolvent companies are often entitled to substantial redundancy payments from HMRC. Depending on the directors length of employment, age, and salary bracket, these sums of money are often enough to cover the cost of a voluntary liquidation entirely.
It is best to call us to discuss your eligibility for this and we can then advise the likely returns.
Be Cautious of Companies Offering Strike Off Under the Guise of ‘Cheapest Liquidation’
For business owners with outstanding debts, striking off a company is not an option.
That said, certain practitioners do sell people a ‘cheap liquidation’ and then suggest this course of action. It is worth understanding that any creditor can have a company reinstated even years after it has been struck off the register if is found that there are outstanding debts.
Despite how tempting this method may appear, we always advice looking the situation squarely in the face and liquidating your company in the legally recommended method.