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What debts are written off on liquidation?

The Quick Answer

The following liabilities (also called unsecured creditors) are written off on liquidation:

  • Trade suppliers.
  • Utilities.
  • VAT.
  • PAYE.
  • Corporation tax.
  • Unsecured bank debt like Bounce Back Loans.
  • Business Rates.
  • Employee claims including arrears of pay, redundancy and tribunal claims.

The debts not written off by liquidation include:

  • Secured debts such as hire purchase.
  • A debenture as the lender has security on the company assets.
  • Debts you have personally guaranteed such as a bank overdraft.

The answer in more detail

Although liquidation brings the company to an end the unsecured creditors can still claim on the company assets that are left. They can claim after secured and preferred creditors and expect to get a payment equally from what is left.

 

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Author: David Kirk - ACA FABRP
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David Kirk

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