When is closing a limited company the most suitable option?
Many companies trading in the UK at present may find themselves in an insolvent position, or suffer from short term cash-flow difficulties. It is always important to take prompt action if a limited company does not have the ability to continue trading.
Closing a limited company is likely to be the most suitable option if a company has debts it cannot afford to repay and there is no longer a viable business to be saved.
Closing a limited company with debt is officially called Creditors Voluntary Liquidation (CVL). CVL is also known as ‘insolvent liquidation’ and is the form of liquidation that is most commonly used in the UK.
To start the CVL process, the company directors appoint an Insolvency Practitioner who will liquidate all the assets, and then distribute funds back to the creditors. All outstanding debts after the repayment are written off and the company is dissolved at Companies House. This doesn’t include debts personally guaranteed but our business debt advisors can provide specialist advice on this too.
Directors could also be entitled to a redundancy claim of up to £15,750 from the Redundancy Payments Office. If you are unsure how to close your limited company, then we would urge you to seek advice from our business debt experts. To find the best solution for you, try our quick questionnaire.
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Call our experienced team for business advice now on 0333 9999 636.