Yes. If your company is insolvent you need to take advice from an Insolvency Practitioner to fully evaluate the financial position of the company and consider the options available. The options available would include a Pre-Pack Administration or Administration or Creditors Voluntary Liquidation. Whichever Insolvency process you use it is possible for the directors to buy back the equipment and tools of the company for use in a future business. The price will need to be the market value of the equipment and the terms will be agreed with the Insolvency Practitioner.
If I put my company into Creditors Voluntary Liquidation, could I be a director of another company?
Yes. Simply being director of a limited company that enters Creditors’ Voluntary Liquidation does not prohibit that director from acting as a director of a successor company. The Insolvency Practitioner will report on the conduct of all directors to the Insolvency Service and only, in the unlikely event of very serious misconduct by a director, is there likely to be any threat of any disqualification proceedings. Even should this apply, it is likely to take several years from the date of the liquidation to the date of any disqualification order.
If I put my company into liquidation, would it be best that any successor company is in my wife’s name?
No. Should you be involved in the management of the successor company you are likely to be a “shadow director” and as such, would assume all the responsibilities of a director. You should carefully discuss this point with your accountant and it will depend on how active your wife is with regards to the business as to whether she should be a director or not.
How does Creditors Voluntary Liquidation differ from Administration or Pre-Pack Administration?
An Administration or Pre-Pack Administration would be used where the business or at least part of the business could be sold as a going concern. There would be continuation of the business at all times to ensure that any goodwill was retained.
Any trade has to cease once directors have resolved to commence a Creditors’ Voluntary Liquidation procedure. When a company enters Creditors’ Voluntary Liquidation it is implicit that there is no realisable value of the business itself.
Whether the company entered a Creditors’ Voluntary Liquidation, Administration or Pre-Pack Administration would be something that would be discussed with you at some length at an early stage with an Insolvency Practitioner.
30 Oct 2013