Limited Company Voluntary Liquidation

Limited company voluntary liquidation is a common phrase used to describe director-led liquidations. Within the Insolvency Act 1986 they are known as; Creditors’ Voluntary Liquidation and Members’ Voluntary Liquidation.

Limited company voluntary liquidation is a procedure used to shut down both solvent and insolvent companies.

Insolvency occurs and is most often shown by the inability of a company to pay those who it owes money to when they are due payment.

Creditors’ Voluntary Liquidation

Creditors Voluntary Liquidation is an insolvent company limited company voluntary liquidation procedure that is started by the company directors. It is the most common form of corporate liquidation within the UK and is the most flexible of insolvency liquidations for an insolvent limited company.

Members’ Voluntary Liquidation

Members Voluntary Liquidation is initiated by the Shareholders of a company with a view to distributing the value of the company’s assets to the shareholders. This limited company voluntary liquidation has increased in popularity since the legislation of the ESC-C16 concession in 2012. It gives healthy tax benefits to any amount of the company shareholder’s funds by classing the distributions as capital receipts rather than income. The legislation in 2012 brought in a cap so the only way to receive these tax benefits over £25,000 is to go through this limited company voluntary liquidation.

Compulsory Liquidation

There is an alternative liquidation option to the limited company voluntary liquidation options and it is called Compulsory Liquidation.

Compulsory Liquidation is an insolvent company liquidation procedure which is generally started by the company creditors (those who are owed money by the company). They present to the Court a winding-up petition against the company that owes them money and if accepted, the procedure will be performed by an Official Receiver appointed by the court.

At Insolvency.com we are Licensed Insolvency Practitioners so can advise and deal with both company and personal insolvency issues and formal procedures.