Query re liquidation

Discussion in 'Insolvency' started by loulou71, Feb 5, 2018.

  1. loulou71

    loulou71 UKBF Newcomer Free Member

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    Hopefully a simple query here. Is it usual for a company to appoint a Independent Liquidator to essentially close down a solvent business?
     
    Posted: Feb 5, 2018 By: loulou71 Member since: Feb 2, 2018
    #1
  2. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Hi - it depends.

    There are two types of Lqn - Creditors Voluntary Liquidation or Compulsory.

    In a CVL the Directors instruct their own choice of IP (which creditors can vito depending on the % of their claims) and Shareholders will have to approve this.

    Compulsory lqn is done through the Court so the Official Receiver is initially appointed Liquidator.

    The O.R may decide to keep the case in house, or farm it out on a rota to an IP to replace them and take over.

    Alternatively again creditors can try to replace the O.R with their own choice of IP.
     
    Posted: Feb 5, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #2
  3. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Sorry I note you said solvent not insolvent.

    If you meant solvent then the directors and shareholders will approve and appoint their IP for a Members Voluntary Liquidation (MVL).
     
    Posted: Feb 5, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #3
  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    Yes so they claim tax reliefs on proceeds received giving them an effective tax rate of 10%
     
    Posted: Feb 5, 2018 By: UK Contractor Accountant Member since: Sep 18, 2013
    #4
  5. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    If assets are over £25k.
     
    Posted: Feb 5, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #5
  6. loulou71

    loulou71 UKBF Newcomer Free Member

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    Ok that would possibly make sense. Can they continue to attempt to sell the business at the same time as IP being appointed?
     
    Posted: Feb 5, 2018 By: loulou71 Member since: Feb 2, 2018
    #6
  7. Gavin Bates

    Gavin Bates UKBF Regular Full Member

    Posts: 341 Likes: 60
    Technically the answer is yes but it would be better to sell before a liquidator is appointed as it would just increase the professional costs etc.

    Regards

    Gavin
     
    Posted: Feb 5, 2018 By: Gavin Bates Member since: May 9, 2016
    #7
  8. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    Posts: 1,691 Likes: 210
    Usually all assets sold pre MVL so simpler balance sheet for Lqr to deal with and therefore lower costs, otherwise the Lqr will have to get involved in the sale.
     
    Posted: Feb 5, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #8