Partner Article

How to Wind Up a Company

In the United Kingdom, the term “wind up” a company refers to the process involved when faced with compulsory liquidation. Compulsory liquidation is when a company is forced to close due to insolvency, using assets to pay creditors before ceasing to operate moving forward.

This is a detailed process which cannot be taken lightly. During the wind up process a liquidator is appointed who winds up the affairs of the company and once the process is completed, the company stops operating and is removed of the Company Register.

How to wind up a company is a long and daunting process and during this period, the director stands down and allows an approved and licensed liquidator to take over. During the process the liquidator covers a number of steps to ensure all the company’s affairs are in order before they strike the company off the register and the company stops operating forever.

The first thing the liquidator will do is complete all the contracts the company currently has in place. They will either end or transfer the contract, depending on the type and who it is with. This includes employees, who will be advised of the proceedings and their contracts will be ended moving forward. In most instances, the employees will be given some notice.

The second step of the wind up process is to stop all operations. Once all contracts have been handled, the company will close their doors for the last time and cease operations completely. By this time creditors will have been informed, customers will have received their products or services or their project will be handed to another company to complete.

Next all legal disputes will be handled. If the company has claims against them or have creditors taking them to court over non-payment, these will be handled before any further winding up procedures can be managed.

Once all the disputes have been handled, the contracts have been transferred or ended; it’s time to sell all the company’s assets. Assets include buildings, equipment, vehicles and anything else the company has that can be sold for cash. Selling the assets increases the cash flow of the company, enabling the liquidator to work in the interest of the creditors and ensure that they are paid quickly and effectively.

During the time where the assets are being sold, all monies owing will be collected and put with any cash earned from the assets. This is then distributed to the creditors, ensuring that they have been paid.

In the event that there is any cash over after the creditors have all been paid and all the company’s affairs have been wound up, then any remaining cash is shared among the shareholders.

It is imperative when it comes to winding up a company that you follow the rules and procedures to the letter. You cannot handle the process on your own and you must appoint a liquidator to work on behalf of the creditors. The problem with this is that as a director, you are not protected and may even be held responsible moving forward, which can make it difficult for you to act as a directors capacity for up to fifteen years if found accountable.

It is always advisable to also hire someone to work on behalf of the director. While the liquidator focuses on the creditors, they cannot work on behalf as the director, as this would be a conflict of interest. Therefore you should do some research and look into hiring a turnaround practitioner who can work on your behalf and help you through the process, ensuring you interest are also being met.

About Us: Jameson, Smith & Co is a company debt specialist based in London in the United Kingdom. This well-established company offers free business debt advice with a host of services. The dedicated and experienced team of professionals offer everything from business rescue plans to personal guarantee issues and cash flow problems to overdrawn loans, liquidations and so much more. Jameson, Smith & Co has helped hundreds of companies with their business debt, focusing on the director and ensuring due care to creditors at all times. They have built up a solid reputation in the UK for their outstanding customer service and support. To find out more, visit http://www.companydebt.com/winding-up-petitions/winding-up-a-limited-company/.

This was posted in Bdaily's Members' News section by Mike Smith .