Here in the UK it is quite easy to close down an insolvent company if you get the right advice.
It is also important to realise when to take the advice that is freely available as there are many documented instances of company directors being found liable for wrongful trading, and as a consequence having to repay thousands of pounds to the company's liquidator.
By seeking advice early it is possible to avoid any personal implications of the company insolvency and also use the assets of the company to pay for the costs of closing it down.
This year in the UK many thousands of businesses will have to shut due to a down turn in trade as a result of the recession. The majority of these businesses will use the CVL procedure also known as the Creditors Voluntary Liquidation.
The CVL is where the directors of the business invite a professionally qualified insolvency practitioner to come in and advise them. He will often conclude that the business is insolvent and needs to cease to trade so it does not run up further losses. He produces what is called a statement of affairs which sets out the financial position of the business.
The Insolvency practitioner invites the creditors of the business to a meeting where he will be asking them to vote to close the company as it cannot pay its debts. The statement of affairs will be sent to them so they can see that it is insolvent.
Most creditors even if they respond will merely fax in their proxy forms agreeing to the company being wound up and their proof of debt forms to prove their debts.
The company will be declared insolvent and the Insolvency practitioner appointed to wind up its affairs. He then collects in any debts, sells any assets and after discharging his fees pays any money left over as a dividend to the creditors.
In reality there is usually no dividend as the assets realised simply cover the costs of the process.
The assets of the insolvent business are also often bought by the outgoing directors, who start again. This is known as a pre-pack sale.
It is vitally important to take early and effective advice if you think your company may be insolvent.
Information provided by Steve Thatcher of Help With Debt (UK) Limited and total debt solutions company.
For all further reading see http://www.helpwithdebtuk.com
For personal contact email sthatcher@helpwithdebtuk.com
For Steve's thoughts see http://steves-debt.blogspot.com
If you have any debt problem whatsover either personal or corporate make Steve your first call all advice is free. Finally if in the UK and you need a friend to speak to call 01162171406 or 0808 160 5577
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