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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

EFFECTS OF BUSINESS LIQUIDATION

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. 

tip

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.

More questions in this section

How do I remove a liquidator?

If I close or liquidate a limited company will I be personally liable for the tax debts?

Do I have to attend the creditors meeting?

What’s the difference between liquidation and administration?

Is there stamp duty on a distribution in specie in a solvent liquidation?

What Happens If I Can’t Afford to Liquidate My Company?

Do I need to repay my directors loan before liquidation?

Will my CBIL loan be written off if I close?

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Author: David Kirk - ACA FABRP
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Rob Elliott
Kirks and their team recently advised me on the Members Voluntary Liquidation (‘MVL’) process. They made it very simple for me to understand the process, they kept me up to date with progress throughout the liquidation and expertly answered any queries I had. All interactions with Kirks were highly professional and it gave me confidence that my liquidation was safe in their hands. They promised a straightforward process and certainly delivered – I highly recommend the team at Kirks to assist with your MVL.
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We appointed Kirks to manage the process of an MVL when we had ceased trading and found their service to be very straightforward and thorough. A fixed fee arrangement provided us with reassurance and David explained the process clearly to us at the outset. A very professional service all round
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Michale P
I was very impressed with the speed and efficiency with which Kirks undertook the MVL and their help and assistance in explaining the process and resolving any queries.
Anon
Before meeting with Kirks, I had already met with a number of other insolvency practitioners none of whom I considered to be as clear cut and up front as David. The liquidation was executed quickly and professionally and I really am happy that I have done it.
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