Liquidating the company

The action described above can be regarded as wrongful trading; if a liquidator can prove there was wrongful trading then, you are at much increased personal risk. A classic example of wrongful trading is taking credit from a supplier or taking deposits from customers when you know that it is unlikely that you can pay them back.

Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future.

‚ÄčIf your limited company is insolvent you have a duty as a director to consider whether to stop trading.

If you do stop trading you then need to decide on the best way to dissolve (close) your limited company.

Any debts that you owe personally, for example if you have given a personal guarantee, will still need to be paid by you.The financial state of the company is important because it determines what kind of liquidation the company will enter, as well as the types of investigations that a liquidator will undertake.A solvent company is brought to an end via a members' voluntary winding up.(The benefit will be that the creditors can share in the proceeds of a property sale or that they can share in the cash that the individual pays in).Businesses are different and do not need to own assets or cash.The reason for this is because in terms of the Insolvency Act, when one sequestrates there must be a benefit to creditors.

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