Creditors voluntary liquidation is the process used to close a limited company where the directors know that the business is insolvent
and no longer able to pay its creditors.
The directors may well have investigated other options to keep the business trading such as further investment or alternative business rescue solutions. However, where these options are not available, the directors must act immediately to close the business.
If the directors allow the company to continue to trade while it is insolvent, they could be accused of wrongful trading, disqualified as directors and even become personally liable for the company’s debts.
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The key difference between a creditor’s voluntary liquidation and a member’s voluntary liquidation is that the business is insolvent and unable to pay its debts. For this reason, the creditors are given the opportunity to appoint the liquidator of their choice at a meeting of creditors known as the section 98 meeting.
The best way to understand which solution is right for your company is to speak to an expert.
The Beat My Debt forum is great place to start, giving online access to industry experts.
Alternatively you can call Beat My Debt free on 0800 077 6180 and speak directly to one of our expert advisors who will give free, independent and confidential advice.
