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 a Creditors' Voluntary Liquidation (CVL) and a Compulsory Liquidation?
A Creditors' Voluntary Liquidation (CVL) is a voluntary process initiated by the company's directors and shareholders when the company is insolvent. It involves appointing a licensed insolvency practitioner to wind down the business, realise assets, and distribute proceeds to creditors. In contrast, Compulsory Liquidation is a court-ordered process, typically initiated by a creditor who issues a winding-up petition. A CVL gives directors more control and can be less costly and less damaging to reputation, whereas compulsory liquidation often results in the Official Receiver taking control and may trigger investigations into director conduct.
How much does it cost to appoint a company liquidator in Oxfordshire?
The cost of appointing a company liquidator in Oxfordshire varies depending on the complexity of the case, the size of the company, and the amount of asset realisation required. For a straightforward Creditors' Voluntary Liquidation, many firms offer fixed-fee packages, typically ranging from £3,000 to £6,000 plus VAT, with fees paid from company assets. If assets are insufficient, directors may need to fund the process personally, but this can be offset by redundancy claims or other recoveries. Always request a detailed quote and ensure there are no hidden disbursement costs before proceeding.
Can directors continue trading after filing for liquidation?
Once a company enters liquidation, directors cease to have control and must not continue trading except for the purpose of winding down in a way that is beneficial to creditors. If a director continues trading after the liquidation date without the liquidator's approval, they risk personal liability for any debts incurred, and may face disqualification proceedings. The liquidator takes over the management of the company's affairs, and directors have a duty to cooperate fully, providing all books, records, and information requested. Any unauthorised trading can be treated as a breach of duty and may result in legal action.
What are the legal responsibilities of directors during the liquidation process?
During liquidation, directors must cooperate with the liquidator, deliver all company records, and provide a statement of affairs detailing assets, liabilities, and creditor information. They must not hide assets or dispose of them improperly, and they must not grant preferential treatment to certain creditors. Directors are also required to answer questions about the company's trading history and financial decisions. If wrongful trading or fraudulent activity is discovered, directors may be held personally liable for company debts, face disqualification, or in severe cases, criminal prosecution. Seeking professional advice early helps mitigate these risks.
Will employees be paid if the company goes into liquidation?
Employees may be entitled to claim certain statutory payments from the National Insurance Fund if the company is insolvent and cannot pay them. These claims include arrears of wages (up to a statutory cap), holiday pay, notice pay, and redundancy pay. The liquidator will provide employees with form RP1 to submit their claims. Preferential status is given to employee wage arrears (up to £800) and pension contributions, which are paid from company assets before unsecured creditors. However, any amounts not covered by the statutory scheme may be lost, so it is crucial to act quickly and seek advice from the liquidator.
Can a company liquidator help avoid director disqualification?
Yes, an experienced company liquidator can help directors avoid disqualification by providing guidance on proper conduct throughout the insolvency process. They can review trading history to identify potential issues, such as wrongful trading or breach of fiduciary duty, and advise on mitigating steps. The liquidator is required to report to the Insolvency Service on director conduct, but if the director has acted reasonably and cooperated fully, the report may be favourable. In some cases, directors can offer a voluntary disqualification undertaking to avoid court proceedings, but this is only advisable with expert legal advice. Early engagement with a liquidator is the best protection.
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