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Effects Of Liquidation On A Business

Last updated: March 30, 2021

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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Author: David Kirk - ACA FABRP
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