The company’s liabilities must be paid first, any remaining surplus will then be distributed to the shareholders.
The liquidation process involves the closing of the accounts up to the liquidation date, coordinating with audit professionals to have all pending audits submitted and all tax returns filed and finally appointing a liquidator to have the company dissolved and eventually struck of the registry.
When a contractor is trading a limited company, there is likely to be a time when they would benefit from speaking to a Liquidator. Although the terms Liquidator and Insolvency Practitioner have negative connotations, the advice these professionals give can be of huge financial benefit to contractors.
He is not trying to dodge paying his dues (he has always paid corporation tax and VAT for his business and personal tax where applicable), he simply cannot pay his debts.
Overview Liquidation is a process where the company’s assets are seized and realised, with the resulting proceeds used to pay off its debts and liabilities.
If you’re the director of a limited liability company that goes into liquidation, you face little risk – provided that you’ve acted properly and in good time – but there are a number of consequences that you need to be aware of.
When a liquidator is appointed, most of your powers as a director will cease.
You will no longer have control of the company or anything it owns, nor will you be entitled to act for or on behalf of the company.
However, your duties and responsibilities as a director remain.
Unsecured creditors are paid on a pari passu basis, i.e. Any surplus is then distributed among the contributories of the company.
Reasons for winding up a company Members' voluntary winding up The company’s contributories (also known as members or shareholders) may pass a resolution that the company be wound up and that a liquidator be appointed.
A company shall be dissolved and consequently wound up in the following cases: Liquidation, or dissolution is the procedure for concluding the affairs of a company which is no longer required, or which cannot continue by reason of its insolvency.