Why does a company go into liquidation?

Out of all the five main interrogative questions (which, where, what, when, why) why is definitely our favourite.  The rest are important but are all subjective in giving you a specific answer, why can lead you in some very interesting and unexpected directions.


Your top liquidation questions answered!

Liquidation

 

 

 

 

 

 

 

This is why psychology is possibly the most fascinating area of human study – ultimately it can reveal things about people that they didn’t realise or understand themselves and eventually leads you to the why of any why.

 

One of the most popular questions we get asked is why companies go into liquidation – for which there will be as many answers as there are stars in the galaxy. Circumstances, motivations, events, emotions, relationships, finances – a multitude of tangible and intangible factors and inside and outside of a business’ control can lead it willingly or unwillingly to this point. 

 

Once liquidation has been arrived at however, the choices narrow considerably into what happens next – 

 

 

 

 

This is a voluntary decision taken by the company owners or directors to close an otherwise solvent and profitable business. It can pay its debts and meet its obligations on time so the process is quite orderly. 

 

 

 

 

When a business cannot meet its debts and liabilities then its shareholders can decide to voluntarily begin the process of liquidation themselves if a majority of them agree.

 

 

  • Compulsory liquidation

 

 

If a company can’t pay its bills and its debts the directors can apply directly to the courts to ask for the process to begin.

 

—————————————————————————————————————————

 

Voluntary liquidation allows more control than compulsory liquidation especially when these other additional factors are taken into consideration:

 

  • Personal Guarantees – when a company goes into liquidation then any personal guarantees given by directors will ‘crystallise’ or become payable
  • Director’s redundancy claims – An often overlooked detail in liquidations is that company directors can be eligible for redundancy too – including unpaid holiday pay and other accrued benefits
  • Staff redundancy process – including overseeing all outstanding obligations 
  • Sale of assets/Transfer of leases – any outstanding issues regarding assets of the business will be dealt with

 

No matter why – any company facing liquidation will need professional qualified assistance to make sure that every legal i is dotted and t crossed. 

 

Our team of expert advisors are available for a free initial consultation to talk through your own unique circumstances and work with you to devise and implement the most effective and efficient way forward for you and the business. 

 

Once the process is underway, we will work with you through every stage until completion when your why and be replaced with a what – what you’re going to do next. . 

 

Contact Us

    More News