The short answer is No!

Do I have to place my company into liquidation?

Again, the short answer is No!

However directors do have a positive duty to prevent trading while insolvent – but this can be achieved without liquidating.

If I don’t have to liquidate, who will do it?

Let’s talk about that. Before we do, you need to understand –

Who does liquidation benefit?

When a company’s liabilities exceed its assets, there is an expectation that an independent person should be appointed to explain the reasons for failure and to investigate whether the directors have acted appropriately, or illegally.

Because of this investigative role, the appointed person must be entirely independent of the directors.

Independence is critical and all liquidators maintain it.  Even where directors select and pay a liquidator, they have no control over the process whatsoever.

The liquidator acts for the benefit of the creditors

Liquidation of insolvent companies must be performed by a registered liquidator who acts in the best interest of the creditors.

As the creditors representative, the liquidator will perform a detailed investigation that will seek to explain why money has been lost.

In doing this, the liquidator will closely review the records of the company with particular attention to large or unusual transactions as well as all transactions involving the directors over many years.

When liquidators identify illegal or voidable transactions, insolvent trading or unpaid director loan accounts, they will regularly take legal action against the directors and their personal assets. They do this in order to achieve a return for the creditors.

Is company liquidation the best step for you?

An unplanned liquidation can be a disaster for the directors and their personal financial position.

Even when the situation is desperate, liquidation is not your only option. It is only one in a range of options that you as a director need to consider – and consider from your perspective.

So before you liquidate, make sure you can answer the following;

• is company liquidation at this moment really the best step for you personally and financially?
• are there other alternatives that would produce a better outcome for you and your family?
• if liquidation is appropriate, is now the right time and am I fully aware and prepared for the risks associated with such a choice?

The Insolvency Experts act in your best interest and will ensure you are fully informed before you take any step.

Can you liquidate you own company? – No – but you can take control through knowledge of all options available to you.