Pros and cons of liquidating assets

The petition can also be made by the company itself, its shareholders (for various reasons usually because they are unhappy), or Directors, however in practice the majority of court liquidations are petitioned by creditors.

If it is found that the company is in fact insolvent then the liquidation will be converted to an insolvent Creditors Voluntary Liquidation.The reason for this is if the money is released under a MVL then the funds are taxed at 25%, whereas if the money was taken out as salaries it would be taxed at a much higher rate.Statutory Declaration of Solvency In order for a company to be placed in a Members Voluntary Liquidation, the directors of the company have to swear a Statutory Declaration of Solvency, which summarises all the company’s assets and liabilities and states that the company must pay all its debts in full within 12 months from the date the liquidation commences.Before dissolution, your company must have already paid off all its debt – this is important, as if you dissolve a business whilst debt is still outstanding, you could be held personally liable and incur considerable costs if the company has to be resurrected!If done correctly, dissolution itself is straightforward requiring only a few letters and some form filing at companies house.

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