The mantra of any business is cash is king. No matter how big or small your business is, if you run out of cash then you are teetering on the edge of business insolvency and this can be a worrying place to be.
It may be better for you to understand exactly what this means for you and your business so here is a guide to explain what happens in these circumstances.
Once a company or business is declared insolvent, it will have to go into liquidation. Liquidation can happen one of three ways. The first is a members’ voluntary liquidation where you know your business can pay all its debts, but you cannot sell it and you do not want to run the business any more.
The second is a creditors’ voluntary liquidation and this happens when you know your business cannot pay all the money it owes. To be able to liquidate the company you, as the company director along with your shareholders have to pass a special resolution to cease trading.
Once you have completed this, you should file this special resolution with Companies House within the next 15 days and in addition you must also advertise this special resolution in the London Gazette within the next 15 days.
The last option is a compulsory liquidation order, where one of your creditors takes out an order with the court to wind up your company. Once you have received the order from the court you have 21 days to pay or present a payment plan to the creditor to agree terms.
At this stage, your liquidator, administrator or receiver will proceed with the liquidation. All of these professionals have to be qualified to carry out this role.
Your liquidator will ensure that any assets your business has are sold, that your business has fulfilled all its contracts and that any money owed to your business is collected. Once this has happened, your company will be struck off the record at Companies House.
If you want advice about business insolvency and the implications of this process, please call our experienced team on +44 20 7490 5861, complete our Free Online Enquiry or email us on firstname.lastname@example.org and we’ll be in touch with you shortly to talk to you about how we can help.