Do you need to know how to liquidate a company with no money for payment of fees? You may feel like there’s no way out. At that point, many people give up. But don’t despair just yet! There are a few options available to you. If you’re worried about liquidation and don’t have any money, contact us today to see how we can help. This article answers the question if you cannot afford to liquidate.
Table of Contents – how to liquidate a company with no money
- Can you liquidate a limited company with no debts?
- What happens if I can’t afford to liquidate my company?
- What happens if you can’t afford the liquidator fees?
- How to close a limited company when there are no company assets or funds for a liquidation
- Directors redundancy pay
- How much redundancy pay are you entitled to when you liquidate?
- What happens if you can’t claim director redundancy during liquidation?
- If you need further help or guidance
Can you liquidate a limited company with no debts?
Yes, if your company is solvent in that it has no outstanding liabilities, or, has sufficient funds to discharge all current liabilities. If this criteria is met, there is an option to liquidate your company called Administrative Dissolution, also known as “striking-off”.
The current price of applying for dissolution is £10 and you send the completed DS01 form to Companies House.
Dissolution is the legal process of closing a company, which includes meeting all requirements, like notifying creditors and filing paperwork.
Although carrying out dissolution correctly won’t have any long-lasting effects on directors, they could face legal action if they don’t follow the rules and regulations of company dissolution. If the company is later found to be insolvent, directors might even be prosecuted or disqualified.
What happens if I can’t afford to liquidate my company?
If your business has extensive unpaid debts and is encountering severe financial hardships, to the point where you cannot afford liquidation, you will probably have to file for a standard insolvency liquidation process like a Creditors Voluntary Liquidation (CVL).
Although a Creditors Voluntary Liquidation is more expensive because you have to pay the liquidator’s fee, it offers to allow you maintain control of the process, saving money in the long term.
As the director of a company, you have the choice to enter into CVL. This is not a compulsory liquidation that is being forced upon you by a creditor. If you opt to wait for a compulsory liquidation, you might be investigated for misfeasance. If found liable, you will personally be responsible for the company’s debts. If your company is insolvent and you take no action, one or more of the company’s creditors can initiate a Winding up Petition against the company which takes the control out of your hands.
What happens if you can’t afford the liquidator fees?
When a company is insolvent, it means that its liabilities exceed its assets. This basically means that there is limited liquidity within the company’s assets.
If you are eligible to receive redundancy pay, you may use this money to cover the liquidator’s fees and to use any further surplus redundancy money to cover your own personal expenditure.
How to close a limited company when there are no company assets or funds for a liquidation
If your company is unable to pay for an insolvency practitioner, it will become the responsibility of the company director to find funding to cover liquidation expenses. This can be done in one of the following ways:
Personally raise the funds
It is possible to pay the costs of the Creditors Voluntary Liquidation from your own personal funds. This largely only applies to the fixed costs of the pre-appointment stage and can either be by way of a direct payment to the insolvency practice, or via a loan or third-party contribution to the CVL to increase the value of assets available to meet the costs of the CVL
In the absence of any alternative funding options, this method can be a good option to ensure you follow your obligations as a company director and reduce your chance of personal liability in the future.
Directors redundancy pay
Should a company be in danger of liquidating, directors may have the right to Director’s Redundancy Pay. It is worthwhile verifying whether you legally qualify for this payment since it can go towards paying off any charges related to voluntary liquidation.
Many company directors are unaware of this type of payment and believe when they’re heading down the liquidation route there is no help available to them; however, this is not the case. To be eligible for directors’ redundancy pay, you must have been an employee of the company receiving a monthly wage for at least 2 years. You must also have been working at least 16 hours per week.
How much redundancy pay are you entitled to when you liquidate?
The amount of director’s redundancy pay you will be eligible for will depend on your age, salary, time employed by the Company and current employment situation.
What happens if you can’t claim director redundancy during liquidation?
If you do not meet the requirements for director redundancy, you may have to wait until one or more of the company’s creditors submits a winding up petition. This would lead to your insolvent company being forced into compulsory liquidation. In this case, the liquidator will inspect the directors’ conduct for any evidence of misconduct or behaviour that contributed to the company’s downfall.
If it seems impossible to raise money for a CVL, you may have to apply for a winding up petition and wait to be put in compulsory liquidation.
If you need further help or guidance
If you are in any way concerned about company liquidation and you are having financial issues, contact us here at Company Doctor today on 0800 169 1536 or complete the form and we will call you back. We have our own licensed Insolvency Practitioner with decades of experience to be able to provide you with the expert advice you require.