Company Liquidation in the UK

Company liquidation in the UK is the process of ending the activities of a business. The procedures result in the striking off from the Companies House’s register.

The liquidation means that the assets of the company will be used to pay off any debts and, if any remain, they will be distributed to the shareholders before the process to close a company in the UK ends.

Our team specialises not only in company formation in the UK, but also in winding up companies that are no longer profitable or for which the founders wish to end the activities altogether.

Read this article to learn more about the basic rules for winding up a company in the UK and contact us as needed when you are ready to commence the process.

Types of company liquidation in the UK

There are three types of liquidation, briefly listed below by our lawyer in the UK:

• creditor’s voluntary liquidation: the creditors commence the process because the company can no longer pay its debts;
• member’s voluntary liquidation: the company members choose to close a company in the UK for various reasons, not because the legal entity cannot pay its debts; some reasons may include the fact that they no longer wish to run the business, or that the company has concluded its projected business activities in the UK;
• compulsory company liquidation in the United Kingdom: when the company cannot pay its debts and a court application to close the company is submitted.

Company owners may choose a member’s voluntary liquidation for some of the reasons listed below by our lawyer in London:

• the business owners wish to retire;
• the owner wishes to step down from the business and no one else can or will take up his/her position;
• the person simply does not wish to run the business anymore.

To start the member’s voluntary liquidation, one needs to draw up a Declaration of Solvency. Before this stage, the business owner will review the company’s assets and liabilities.

Our lawyer in England will give you more details about each of these situations, including forced liquidation when the company can no longer pay its debts.

If you are the director of a company in this situation, our lawyer will tell you more about the director’s liability once the process of winding up a company in the UK starts.

The steps needed to voluntarily close a company in the UK

A member’s voluntary liquidation is a preferred method of ending the activities of a company. Our lawyers list the steps that follow, once the owner(s) draw up the Declaration of Solvency and effectively commence the winding up process:

1. Sign the statement for company closure in front of a solicitor or notary public;
2. Call a general shareholder’s meeting within 5 weeks of passing the resolution for voluntary closure;
3. Appoint a liquidator who will be in charge of the process;
4. Within 14 days of this appointment, advertise the resolution to close the company in the Gazette;
5. Within 15 days of the resolution, send the statement to the Companies House.

If you need more information about any of these steps, or you are interested in the other situations in which company liquidation in the UK can take place, please reach out to our attorney.

Statistics on wound up companies in the UK

According to the company insolvency statistics for December 2023, the number of creditor’s voluntary liquidations increased by 9% in 2023, compared to 2022. Our lawyer in the UK summarizes some of this statistical data below:

• in 2023 there were 20,577 creditors’ voluntary liquidations;
• the number of compulsory liquidations was 2,827;
• the total number of company insolvencies in 2023 was 25,158.

Contact us if you want to know more about company liquidation in the UK, or if you need assistance during this process.