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Insolvency Liquidation is the process used by liquidators to legally bring to the end a company at the request of shareholders/directors.
This action is usually taken because the business is insolvent in which case a Creditors’ Voluntary Liquidation (CVL) takes place involving a meeting of creditors or it could be, for instance, due to the owner deciding to close the business as he or she is retiring when it would be a Members’ Voluntary Liquidation (MVL).
A Liquidator, who is an authorized insolvency practitioner, is appointed who takes over the responsibility for winding down the company that will no longer carry on doing business or employing people. Following the appointment of the liquidator, the directors no longer play a part in the business but could be asked by the liquidator for some sort of help in connection with the winding-up.
The process will include the selling of any assets to reduce/clear the company’s indebtedness. Once this is concluded, the company will be dissolved, removed from the register at Companies House and it will exist no more.
The process for liquidating a small company is usually straightforward and takes a few months.
Liquidation allows the directors to move on to pastures new whether that is in the same sort of business or a completely different venture.