What happens to a company after a creditors' voluntary liquidation?
In a creditors voluntary liquidation a liquidator is appointed to collect in the assets of the company, bring about liquidation sales and then distribute the proceeds of the liquidation sales for the benefit of the company’s creditors, and if there is any surplus, then for the company’s members. The liquidator is in control of the company during the liquidation process.
Once the liquidator has completed all of its tasks as far as is possible then the liquidator will send a report to creditors with a release notice, suggesting that now that the company has been fully wound up and all matters dealt with, it should be dissolved from the company register at Companies House.
This will occur if:-
- all assets have been dealt with
- the liquidator is happy as far as possible that all creditors and employees have been made aware of the liquidation and have had a chance to contact the liquidator
- the directors have completed all their obligations in the liquidation; and
- no further matters need to be raised in the liquidation, such as taking a claim against directors or disqualification proceeding need to be brought against directors.
If the liquidator believes that the next step is dissolution, then they should prepare an end of liquidation report setting out what assets have been collected in, for how much, what has been distributed, and to whom. This should go to creditors with a notice of intention to dissolve the company. Following that it will be sent to the Secretary of State to inform the Secretary of State that the liquidation will shortly come to an end.
The liquidators will give the creditors time to object to the liquidator’s release and the dissolution if necessary.
If there are no objections by the creditors, the liquidator will file the report with the court and deliver the same to the Registrar of Companies and let them know whether any creditors have objected. The liquidator’s appointment will be vacated once they have filed these documents with the court and the Registrar of Companies, and the liquidator will be released at the same time unless any of the creditors have objected to the release for some reason.
In a creditors’ voluntary liquidation, the liquidator must within 14 days from the date of their final report send a copy of it to the company’s members as well as to the company’s creditors.
Once the Registrar of Companies has received the notice of the end of liquidation and the release of the liquidator then they will provide a confirmed date at which the company will be dissolved. This is normally 3 months from the date that they have processed the claim.
If there is any legitimate objection to the liquidator’s release, then a court will decide whether to make an order deferring the date of dissolution in order to resolve any issues.
Contact the company liquidation experts today
The effect of a creditors voluntary liquidation is ultimately that the company will cease to trade, with the ultimate aim that it will be dissolved from the Companies Register. Even if parts of the business and/or assets may be sold in the liquidation, the company itself will be dissolved. If you would like further information on this you can contact our company liquidation experts at Francis Wilks & Jones today, who can talk you through the process further.