Creditor's Voluntary Liquidation

When a company is insolvent, and there is no hope of saving the business, then one option left for members (shareholders) is to pass a resolution to wind up the company. A meeting of creditors is called to consider the winding up and to appoint a liquidator. The Liquidator will realise the assets and distribute the funds to the creditors according to their rights within the liquidation.

The Liquidator will be a licensed Insolvency Practitioner.

Directors must take special care during this hiatus period of knowing that the company is insolvent and the actions they take until the meeting of creditors is called. They may find that they have personal liability to any creditor whose liability has increased during this period.

Questions

Q. What are the different kinds of creditors?

A. There can be preferential, secured and unsecured creditors who will have different rights to dividends within the Liquidation.

Q. Does the Liquidation affect Retention of Title? (ROT)

A. If you are able to prove a valid ROT clause and clearly identify your goods to the Liquidator, then you may be entitled to receive back your goods.

 Q. What are the implications for directors of trading while insolvent?

A. They may be held personally liable for any increase in creditors liability during the time when they knew or ought to have known that the company was insolvent. They may also be disqualified as acting as a director for up to 15 years.

For a free, no obligation discussion, please do not hesitate to contact our team

on 028 87721194.

Please click on one of the following for further information

• Administration

• Company Voluntary Arrangement (CVA)

• Member's Voluntary Liquidation

• Compulsory Liquidation

• Administrative Receivership

• Informal Workout