Everything directors need to know
If there’s any outstanding debts and/or creditors to deal with including HMRC then these affairs have to be settled first and foremost.
Next, any remaining salaries or redundancy payments have to be paid out to employees, including board members. The company pension scheme has to be finalised appropriately and the business has to be formally removed from the companies house register.
Then there’s the business’s assets. What happens to them if a company is liquidated?
Well, it’s primarily dependent on whether there’s any outstanding money owed to creditors and how much.
Remaining company assets, equipment, fixtures and fittings etc can be sold to any interested buyer including competitors. The price is established by an independent valuer who will then sell them as close as possible to the market value.
Directors can also retain or purchase some of the company’s assets too via the appointed insolvency practitioner but again, only at the established market value.
This might come as a surprise but some company directors will look to sell assets prior to the company liquidation – often to themselves at knockdown prices!
This is in breach of the Insolvency Act 1986 which could see the assets either set aside or the purchaser then personally becomes liable for any shortfall or additional losses incurred.
While a company is going through the procedure of closing, any transactions carried out within a two-year period can be investigated and challenged by the insolvency practitioner if they have reason to suspect any financial jiggery and/or pokery.
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Before a company is dissolved, any owned assets have to be transferred out of its control.
Any property that’s owned by a dissolving company passes onto the Crown as ownerless and becomes known as Bona Vacantia or vacant goods/assets.
The Treasury Solicitor acts for the Crown to administer the estate of people who die without a will (intestate) or without any known blood relatives (no known kin).
They will collect the assets of all dissolved companies in England and Wales and any other ownerless goods.
This can include land and property, mortgages, shares, any outstanding debts and any intellectual property, trademarks, patents and registered designs. Any company bank accounts will also be frozen and the funds passed on to the treasury.
If you want to buy (or refer) a dissolved company asset then this can be done through the official Bona Vacantia office.
To be eligible to buy (or refer) an asset from the Bona Vacantia office:
- Interested in buying other assets of the company
- Be the leaseholder of the property where the dissolved company owned the freehold
- Want to buy land owned by the former business
- Your land is affected by the closing of a limited company
If you’re looking at closing your company then you’ve got several options depending on your circumstances.
If solvent you could consider a Members Voluntary Liquidation (MVL) or other form of liquidation. If you owe money then a Creditors Voluntary Liquidation (CVL) might be a more effective and efficient method of closing and paying off the existing debts.
Regardless of what option is best for your company, the best option is to get in touch with us first.
One of our team of expert advisors will arrange a convenient, free initial consultation with you to fully understand your situation and where your business is at.
They will be able to work with you to tailor the best solution for you to close your company and allow you to move onto your next project – whether it be a new job, company or even a well-deserved retirement!