ACCOTAX - Accountants & Tax Consultants
Welcome to ACCOTAX, a firm of Chartered Accountants in London. The firm was established in 2009 and has helped thousands of businesses and individuals...See More
ACCOTAX - Accountants & Tax Consultants
Welcome to ACCOTAX, a firm of Chartered Accountants in London. The firm was established in 2009 and has helped thousands of businesses and individuals...See More
Frequently asked questions
What is the difference between Creditors Voluntary Liquidation (CVL) and compulsory liquidation in Lancs?
A Creditors Voluntary Liquidation (CVL) is initiated by the directors of a solvent or insolvent company when they decide to close the business because it cannot pay its debts. It is a voluntary process, and the directors appoint a licensed insolvency practitioner to act as liquidator. Compulsory liquidation, on the other hand, is a court-ordered process, typically initiated by a creditor who petitions the court for a winding-up order because the company owes them money. In compulsory liquidation, the Official Receiver or an appointed insolvency practitioner takes control of the company's affairs.
What are the legal duties of directors when their company in Lancs is insolvent?
When a company in Lancs becomes insolvent, directors have a legal duty to act in the best interests of creditors, not just shareholders. This means they must cease trading immediately if there is no reasonable prospect of avoiding liquidation, and they must not take on new credit or dispose of company assets without proper advice. Directors must also cooperate fully with the liquidator, provide all necessary books and records, and attend meetings if required. Failure to comply can lead to personal liability for debts, director disqualification, or even criminal prosecution.
Can I keep my job if my company in Lancs goes into liquidation?
No, if your company goes into liquidation, all employees are automatically dismissed from their roles on the date the liquidation order is made or the CVL resolution is passed. As a director, you are also considered an employee, so your employment terminates as well. However, you may be able to claim certain statutory payments, such as redundancy pay and unpaid wages, from the National Insurance Fund (NIF) through the Redundancy Payments Service. Our liquidators can guide you through this process and ensure you receive your entitled claims.
How much does it cost to appoint a company liquidator in Lancs?
The cost of liquidation in Lancs varies depending on the complexity of the case, the size of the company, and the amount of work involved. Typically, fees are based on the time spent by the liquidator and their team, or they may be a fixed fee agreed at the outset. In a Creditors Voluntary Liquidation, the liquidator's fees are paid from the company's assets, but if there are insufficient assets, the directors may need to contribute to cover costs. We always provide a clear, written fee estimate before you appoint us, so there are no hidden surprises.
What happens to company assets and debts during liquidation in Lancs?
During liquidation in Lancs, the appointed liquidator takes control of all company assets, including cash, property, equipment, and stock. They will sell these assets to raise funds for creditors. The liquidator also investigates the company's financial affairs to identify any preferential payments or transactions that can be recovered. Once assets are realised, the funds are distributed to creditors in a strict statutory order: secured creditors (with fixed charges) first, then preferential creditors (such as employees' wages), and finally unsecured creditors. Shareholders only receive any remaining funds if all creditors are paid in full, which is rare insolvency.
Can I start a new business after my Lancs company goes into liquidation?
Yes, you can start a new business after your Lancs company goes into liquidation, but there are restrictions. You cannot use the same or a similar company name to the insolvent company without court permission, unless you follow specific exceptions under the Insolvency Act 1986. This rule applies for up to five years. Additionally, if you are disqualified as a director, you must not act as a director of any company without leave of the court. However, many directors successfully start new ventures after liquidation, and we can advise you on how to structure your new business legally and ethically.
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