Members' voluntary liquidation (or members' voluntary winding up) - this is when the shareholders of a company decide to put it into liquidation, and there are enough assets to pay all the debts of the company, i.e. the company is solvent.

Creditors' voluntary liquidation (or creditors' voluntary winding up) - this is when the shareholders of a company decide to put the company into liquidation, but there are not enough assets to pay all the creditors, i.e. the company is insolvent.

Compulsory liquidation (or compulsory winding up) - this is when the court makes an order for the company to be wound up (a 'winding-up order') on the petition of an appropriate person. If there is more than one director, all the directors must jointly present the winding-up petition - a single director cannot present a winding-up petition. A creditor can also bring a petition on this basis.

If you are a director or a shareholder and you are also a creditor of your company, you may wish to present a winding-up petition on the grounds that the company cannot pay its debts

Where can I get advice about liquidation?

Before you take any action to put a company into liquidation, you should obtain your own legal or financial advice about this procedure and any other options available to you. You can get advice of course from this site and from speaking to Steve Thatcher on the number here or from replying on the call back request also on this page. We have contacts with many insolvency practitioners who would be ideal for whatever solution you decide to take. You could also take advice from your local Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, any reputable financial adviser or a debt advice centre.

What are the alternatives to liquidation?

There are 3 possibilities:

Informal arrangement - a company might write to all its creditors and see if a mutually acceptable agreement can be reached. It is advisable to include a timetable of when payments will be made. It may be worth pointing out that te alternatives may not return any payment to them.

Company Voluntary Arrangement (CVA) this is a formal version of the arrangement described above. The directors would need to apply to the court with the help of an insolvency practitioner, who would supervise the arrangement and pay the creditors in line with the accepted proposals. We can help you find a practitioner to help you and put together the proposal that you will need to show your creditors.

Administration - this is a court procedure that gives the company some breathing space from any action by creditors. A court can grant an administration order to enable the company to:

- survive, in whole or in part, as an ongoing business;

- organise a voluntary arrangement compromise with its creditors;

- get a better realisation of assets than would be possible if the company went into liquidation.

The procedure is managed by an administrator, who must be an authorised insolvency practitioner. We are able to help you pre-pack your administration, which will mean that you will be able to create a new entity if you so require to continue the business but leave the debt and the legal entity of the company behind.

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