Conduct of the Liquidation | Creditors

Going Into Liquidation

The usual starting point for a creditors' voluntary liquidation is a decision by the directors to seek professional advice. This usually leads to a consultation with an Insolvency Practitioner (IP) and a consensus view emerges that the company is insolvent and can no longer continue to trade.

Remember that no one outside the company can take any steps to put it into voluntary liquidation. This is not a decision for the bank and the timing of it is entirely the responsibility of the directors. If you are asked by your bank to commission an independent accountant's report before taking any steps to go into liquidation, seek independent advice from an IP first. Remember that once you have arrived at the decision to liquidate, the clock is ticking on personal liability. The wrongful trading provisions of the Insolvency Act 1986, impose potential personal liability on directors who allow a company to continue to trade when they know or should have known that it cannot avoid insolvent liquidation.

The usual next step is for the directors to instruct the IP to assist them in calling meetings of members and creditors to put the company into liquidation and to prepare the necessary notices, statement of affairs and other papers for the meeting.