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Can An Insolvent Company Be Liquidated?

Last updated: March 30, 2021

The quick answer

The answer is yes. That really is what liquidation was designed for. 

Liquidation will trigger the end of contracts, leases and finance agreements. It will also mean that all employees are made redundant so that they can claim from the UK Government Redundancy Fund.

It also stops all creditors chasing the company as they have to deal with the liquidator and it also stops any more losses.

What's Involved In The Process?

Liquidation is a process of appointing a liquidator  to close down the company. The liquidator has to be a Licensed Insolvency Practitioner like us. It means that the company stops trading and all of the duties on the directors come to an end (although they have a duty to co-operate with the liquidator).

It also stops statutory deadlines like having to finish year end accounts and file VAT or tax returns.

It takes about 8 days to put a company into liquidation.

Once in liquidation, the liquidator collects in and realises the assets and agrees the creditors claims.

The liabilities of the company only normally get paid from the assets left in the company. There is no obligation for the shareholders or directors to pay off the debts unless they have signed personal guarantees.

Usually the whole process of liquidation takes six months to a year until the company is finally dissolved.


If you need insolvency advice the earlier you talk to someone like us the better as you will have more options. We can help, contact us today.

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Author: David Kirk - ACA FABRP
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David Kirk

Licensed Insolvency Practitioner