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What is strike off?

Any solvent company can apply to Companies House to be struck off the Register of Companies and dissolved. This may be required if the company business is no longer viable, or the company has fulfilled its purpose and is no longer required, or following some sort of reorganisation by a parent company who decides that that company can be struck off the register as it is no longer needed.

  • for a company to use the strike off procedure, the company’s affairs should be very straightforward.
  • the company cannot use strike off if it is insolvent. An insolvent company should look at one of the liquidation methods such as creditors voluntary liquidation or compulsory liquidation in order to go into liquidation to bring about the end of the company properly.
  • the voluntary strike off route could only be used if the company’s affairs can be closed down quickly, and simply, meaning that its assets are distributed and there are no creditors to be repaid now or in the future.

What is a members voluntary liquidation?

Members voluntary liquidation is often used more frequently than voluntary striking off in order to bring about an orderly end to a company using the liquidation process.

In a members voluntary liquidation the members will appoint a liquidator who will oversee the company liquidation, liquidate assets, make distributions to creditors and to shareholders, and then bring about the dissolution of the company from Companies House.

Advantages of a members voluntary liquidation

Whilst the liquidation cost of a members voluntary liquidation is generally higher than a dissolution or strike off, this is still a better option if:-

  • the company has any sort of trading history or is still trading;
  • there are claims from creditors that still need to be settled;
  • there are liabilities in the company;
  • assets may be greater than liabilities and the distribution may be complicated.

Advantages of striking off

If the company that wishes to come to an end and is dormant, or has ceased trading some time ago and there are little remaining assets and no liabilities in the company then striking off may be more advantageous in that it is cheaper a members voluntary liquidation.

However, there is a risk of comeback later if the company is not wound up using the benefit of a liquidator, so the company should be very sure that dissolution is the correct procedure for them before embarking on it.

If you are considering whether your solvent company should be put into members voluntary liquidation or should be struck off the register, contact our company liquidation experts at Francis Wilks & Jones to discuss the advantages and disadvantages of both and what is the most suitable process for your company.

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