The liquidator is paid for their efforts in legally winding up the business. Although fees are often established as a fixed sum, they sometimes may be determined as a percentage of assets sold.
The appointed liquidator will first schedule a meeting of creditors and draught the Statement of Affairs, which contains a comprehensive description of the company’s financial situation.
Additional obligations of the liquidator might include:
- Informing directors of their obligations
- implementing layoffs and handling employee claims
- resolving unfinished business and contracts
- obtaining any money owing to the business
- Notifying the appropriate government agencies, including HMRC, Companies House, and the Insolvency Service
- examining the transactions made in the run-up to the liquidation
- valuation and asset realisation
Who Covers the Liquidation Costs?
As the director of a bankrupt company, one worry you’ll definitely have is how the expenses of liquidation will be covered, particularly if the company bank account is empty.
The expense of liquidation may be reimbursed in a number of ways:
(1) The sale of firm assets may be used to pay liquidation costs.
Selling the company’s assets and any ongoing work after a valuation by a RICS certified surveyor is one of the liquidator’s key duties. These assets may include stock, equipment, or even intellectual property in addition to money in the bank.
Typically, these sales may cover the expenditures of the liquidation.
(2) Directors may personally pay liquidation fees.
You could have no alternative but to make the payment using monies held personally if the proceeds from the sale of the assets are insufficient to meet the cost of liquidation. Directors sometimes utilise personal funds, credit cards, or personal loans to cover the cost of the liquidation. Even if it may seem extreme, it’s often worthwhile to prevent the stress and adverse effects of a forced liquidation livechatvalue.
Redundancy compensation for the company director cannot be used to support the liquidation.
Few individuals are aware that, after their firm is in liquidation, directors of limited companies may be eligible for redundancy compensation. Redundancy pay for directors is often approximately $12,000, which is excellent news for directors who are tight for cash.
Although it has been common practise for many businesses to assert that you can simply use this to pay for liquidation, this is untrue. For insolvency practitioners to recommend a course of action that would ultimately pay for their own fees is a clear conflict of interest. As a result, the Insolvency Service forbids it.
We will always determine your eligibility for directors redundancy if you opt to utilise us as your liquidators. However, this is a different issue from how you can cover any prospective liquidation costs.
I Cannot Afford the Costs of Company Liquidation Solution
The expenses associated with voluntary liquidation must be paid for somehow, therefore in cases where the firm has no cash or assets, the directors will need to raise the funds on their own.
The best course of action if you’re worried about not being able to obtain this money is to just have a no-obligation conversation with us about the problem so we can go through your choices.
What happens if my Director’s Loan is overdrawn?
At the time of bankruptcy, it is not uncommon for directors to have outstanding director loans. Does this money, along with the corporate obligations, be wiped off when the business is liquidated?
No, that’s not the solution. Director’s loans that are overdrawn are regarded as personal debts between the director and the business. As a result, just as with any other firm creditor, you will be required to return the money back into the business.
Directors run the danger of personal insolvency if the liquidator takes legal action against them if they are unable to pay back what is due.
Get Professional, Obligation-Free Advice from Our Team
Please do not hesitate to contact our staff if you have any questions concerning the cost of liquidation or any other issue with business debts or bankruptcy.
