Members' Voluntary Liquidation
Liquidation is the process a company needs to take when they can no longer afford to run as a business, but have enough to cover the bills and outgoings needed once they have closed down and sold all assets. To begin the process, a resolution is passed and it will mean that everything can begin to be liquidated. By this point the company should not be trading or carrying out any transactions anymore, and all assets should be listed.
A team of liquidators will be appointed to then carry out the process and make sure that everything goes to plan. These people will be appointed at the meeting which takes place to declare that a member's voluntary liquidation is going to take place. The reason this process is allowed is because the company will be able to pay off any remaining debt. If the members and company could not cover the costs, basically, if they were in minus figures, then the process would be different.
Once the liquidators have been appointed then they will need to get the assets of a company valued. This may take a while, and at this stage individual members may be able to buy certain things if wishing to go into business themselves or try and reincarnate the existing business. If this does not happen then the assets will be sold.
All outgoings and debts will be listed to ensure that they can all be covered, and then the money paid out to each from the final amount that was gained from the sales. This means that any debts the company owe should be covered and made void because they have been able to be paid off in full.
A meeting of creditors can be called to make sure that no one has any concerns with the process, and shareholders would also have to meet to relinquish their role within the company officially. These meetings are usually called as part of the official process, but do not necessarily need to be attended if everyone feels that the proceedings are fine.
Once the money matters have been dealt with, and everyone has been informed, then a final meeting of the members will be called and everyone will be updated about what has happened. The team who were appointed to liquidate the company will need to send the documents they have made up to the court and registrar and the company will then officially be shut down for good.
It is possible to try and avoid this liquidation process by going straight to the registrar and asking for the company to be struck off, but this is not always a successful procedure and the above process needs to be carried out on most occasions.
After this, the company is officially no longer in existence, so the members can go off and do as they wish. Sometimes some will stay together and try to start a company up again after voluntary liquidation, and learn from the mistakes the first time, but there is no obligation to do this, and there is no guarantee that this will be a successful venture the second time around.
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