As a company director, we know it can be difficult to see the positives in liquidating your company to pay off your debts, but there are advantages to this situation.
For example, many directors choose a process called creditors’ voluntary liquidation which offers a number of benefits unlike trading insolvent and being forced into liquidation.
We’ve put together this handy guide to help you understand the advantages.
Choosing to voluntarily liquidate your company will also save you from being petitioned by the court, which will improve your future business projects.
During a compulsory liquidation the petition to wind up your company is made public a week after it is served to the company directors and when this happens anyone will be able to see that your company is being liquidated.
By doing this, it is obvious that liquidation was a voluntary decision and not a hostile action taken by your creditors or HMRC.
Protection against accusations of wrongful trading
It is the responsibility of a company director to act in the best interests of its creditors when trading insolvent. Not to do so is wrongful trading and could land you in a lot of trouble.
In a compulsory liquidation, the liquidator might be appointed by disgruntled creditors to find instances of this in the post-liquidation investigation.
A post-liquidation investigation is always carried out no matter who appoints a liquidator.
If a director is found guilty of wrongful trading in a liquidator’s investigation, they could face a ban from acting as a director of any company for up to 15 years or even be held personally liable for some of the company’s debts.
Having a future
Making the choice to liquidate your company will mean you’ll no longer have to deal with stressful creditor pressures, constant phone calls from debt collectors, and warnings from HMRC.
When the old company is ended you’ll be able to continue your career as the director of another company without being burdened.
We hope our guide has helped to explain how choosing liquidation could save you unnecessary aggravation and protect your future prospects.
But if you really don’t want to liquidate your company a chat with an insolvency practitioner could reveal some alternative solutions that you may want to consider.
If you’re unsure of the right move for you, do give us a call and we’d be happy to discuss your circumstances in more detail.