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Effects Of Liquidation On A Business

The quick answer

The effects of liquidation on a business means that it will stop trading and the powers of the director’s will cease. The directors are replaced by a Liquidator whose job it is to realise the assets of the business for the benefit of all the creditors. All of the employees are automatically dismissed.

In more detail


Liquidation will stop a company from trading. It can be very useful if you want to stop trading losses mounting up and you want to make your employees redundant so that they can claim from the Government Redundancy Payments Service.

The other effects of liquidation are:

  • No more need to prepare accounts.
  • No need to do VAT returns, PAYE returns or tax returns.
  • No need to file accounts at Companies House.
  • The company bank account will be frozen. 
  • As directors you are free to go off and do something else.
  • It brings a company to a formal and legal end.
  • Creditors can no longer pursue you unless you have given personal guarantees.

It is an effective way of reducing stress and retiring. 


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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David Kirk


David Kirk ACA FABRP

Just a quick email to say a heartfelt thank you for your very calm, considered, expert advice regarding my circumstances on Tuesday. Things looked bleak before you explained my options much more clearly, in simple layman’s terms.
Rob Elliott (14th December 2021)



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David Kirk

Licensed Insolvency Practitioner