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What actually happens in a Liquidation?

 

The liquidators role can be split into three main parts:

The first part is to realize the company’s assets. And to do that we typically use specialist agents valuers to assist us in selling assets, where it’s not appropriate for a liquidator to be directly involved. The agents will advise on the best way of selling the assets. And that may be by way of auction or private treaty sale or whatever it is they recommend.

The second part of the job is to establish who is owed money. And the directors will provide us with a list at the outset and then we’ll make our further inquiries. And the list of creditors could include banks, finance companies, HMRC for PAYE, VAT, National Insurance, Corporation Tax, landlords in respect of rent and dilapidations, employees, respective wages, holiday pay, redundancy, notice pay and then other creditors which will include suppliers of materials goods or services. And then also utility companies such as electricity, gas, telephone, etc. So list of creditors can be quite long, but it’s our job to establish who is owed what.

The third part of the job is to carry out at least a minimum level of investigation to establish whether there’s been any misconduct on the part of the directors. There’s probably a one in 20 chance of a director being disqualified if they have misbehaved, so it doesn’t happen that often. The other part of the investigation enables us to establish whether there are perhaps assets we didn’t know about, or potentially claims against third parties that may achieve additional realisations for the benefit of creditors. Once the liquidators complete there work, he will notify the creditors provide a copy of his final account explaining what money’s been received, where is it gone, and then arrange for the company to be dissolved. Once it’s dissolved, the company ceases to exist.

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