Can I liquidate my insolvent limited company without a licensed insolvency practitioner?
If you don’t have enough money for a licensed insolvency practitioner, there might be other ways to pay for a formal insolvency procedure, like a payment plan. You can’t close a company by yourself because UK law says only a licensed insolvency practitioner can be chosen as a liquidator in any formal liquidation process.
What happens if you can’t afford an insolvency practitioner? Can you liquidate your company yourself?
My company is clearly failing, and I doubt it can recover. I want to close the business through liquidation, but I lack the funds to hire an insolvency practitioner. Can I liquidate the company on my own?
Technically, “liquidation” means selling a company’s assets to repay its debts. So, any business can do this independently, particularly if they’re conducting a partial liquidation, selling some assets to repay debts while aiming to continue the business.
However, there are also formal insolvency procedures known as voluntary liquidation and compulsory liquidation. These procedures can only be conducted by a licensed insolvency practitioner. But why is that the case?
Whether you choose to liquidate your company voluntarily or wait for creditors to force compulsory liquidation, the result remains the same – creditors will decide who becomes the liquidator. Therefore, UK law specifies that only a licensed insolvency practitioner can be appointed as the liquidator in any formal liquidation process.
Be cautious when seeking advice; ensure you’re consulting with a qualified insolvency practitioner and not a broker or middleman who might try to impose unnecessary upfront fees.
If you wish to shut down the company and you lack assets to liquidate, you could dissolve the company and remove it from the Companies House register.
However, this process usually takes around 3 to 6 months, and you’ll need to prepare and present cessation accounts to proceed.
It’s crucial to be cautious about your actions and accounting practices once you know the company is trading insolvent. If you try to sell off assets in an independent liquidation and sell them well below market value, you could face accusations of wrongful trading.
Moreover, it’s important not to take out any credits or loans while the company is insolvent. If you’re found guilty of wrongful or fraudulent trading, you could be personally liable for these debts.
If you’re worried about the expenses of liquidating a company and think you can’t afford it, please contact us at 0121 769 1915 or email us. We may be able to negotiate a deal with you to resolve your business insolvency problem as efficiently as we can.
Read More:
- Retention of Title – How does company insolvency affect this
- Companies Act 1989 Definition & Overview
- Companies Act 2006 Definition & Overview
- Company Directors Disqualification Act (CDDA) 1986 Definition
- What Happens to the Debts of a Dissolved Company
I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.