Putting a Company into Liquidation

Many Directors of small businesses are now seriously worried about the ability for their company to survive. Now they and are looking to put their company into liquidation.  Loans and top up loans from the Government have saddled the companies with debt.  The loans were useful at the beginning of the Covid-19 crisis but will begin to move those businesses into Zombie companies. 

There comes a point when only a fresh start will make a business profitable. The opportunity to dump a couple of Government backed loans along with any overdue rents will be irresistible. This can be done by putting a company into liquidation.   The choice becomes easier when there are no personal guarantees around.

Any loans that may have been made to a director will have to be repaid to the liquidator as will any dividend payments made at a time of insolvency. Also any expenses that are considered to be a benefit to the director and not the company will be scrutinized.

Make sure that your accountant has brought the accounts up to date so that any repayment of director loans are shown to have been repaid. Link all expenses to the relevant section in your accounts and stop taking dividends when you are making a loss!

It is always easier to start a company than to close it so make sure you take care to prepare your paperwork rather than just throwing loose paper into boxes.

A fresh start with a new business may feel hard at first but that will probably be better than flogging a dead horse! a significant number of companies are totally insolvent. Credit agencies will record Covid loans and turnover will still be slow throughout 2021. The choice may be simple. Take action now and place your company into liquidation or struggle during this major recession.