The main reasons to liquidate an insolvent company allows you to bring your liabilities and obligations to an end and to stop the stress of running a business that is in trouble.
In most cases you don’t have to pay your creditors (suppliers) back.
Liquidation will mean that a liquidator takes over and deals with you creditors. Unless you have personally guaranteed a creditor you will never have to speak to them again. In addition, your obligations to file accounts and returns at Companies House will come to an end. You also no longer have to fill in tax, employer or vat returns with HM Revenue and Customs.
If you have employees who are owed money it means the government will step in and pay your staff in particular their redundancy claims, pay in lieu of notice and arrears of pay. These pay outs can be substantial.
If you know you cannot pay back all your creditors and that continuing to trade will not make the position better you should stop trading and liquidate your company (unless there are very good reasons not to).
Although liquidation can be a huge relief when it finally happens you will still need to help the liquidator fulfill his or her role, although the time needed to do this does tend to reduce quite quickly.
If you would like to know more about liquidating your company and the process involved, contact David today for impartial and professional advice. Read our guide on how to liquidate a company.