How to Deal with an Insolvent Liquidation
What is an Insolvent Liquidation?
A liquidation where all creditors cannot be paid in full (i.e. there are insufficient assets) is an Insolvent Liquidation.
There can be 2 types of insolvent liquidation – Voluntary Liquidation (also known as a Creditors Voluntary Liquidation or CVL) and a Compulsory Liquidation (where the winding up is done through the court).
What is the difference between a liquidation, insolvent liquidation, CVL and a voluntary liquidation?
In simple terms – nothing, they are different words for the same process. A liquidation is the closure of your company, the realisation (selling off) of its assets, followed by payment in part or in full to your creditors.
A CVL or insolvent liquidation means your creditors do not get paid in full. If you are in a position where you cannot pay HMRC, business rates, trade creditors, etc., and you see no way forward you need to contact us to start the process of placing your company into liquidation (an insolvent liquidation).
What impact is there on me personally if my company goes into an Insolvent Liquidation?
There is no direct personal impact (e.g. it isn’t recorded on your credit file) however if you have provided personal guarantees, these may now get called on and this could affect your personal position. Similarly, if your company is going into liquidation it may have an impact on your earning ability. When you contact us we can discuss and consider all the aspects of your circumstances.
Is a Compulsory Liquidation an Insolvent Liquidation?
Yes, if you have a received a winding up petition from a creditor then they are looking to place your company into Compulsory Liquidation because it cannot pay its debts.
Can I avoid an Insolvent Liquidation?
You might be able to, but because this is a very subjective question it is impossible to provide such guidance on a website.
It may be that an alternative insolvency process, such as a Company Voluntary Arrangement may be much more suitable to your circumstances and help you avoid an Insolvent Liquidation. It is also possible that by simply securing additional funding that you will be able to avoid an Insolvent Liquidation, but please contact us for more help and guidance on this.
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