Creditors Liquidation- It is important to take early and expert advice
Creditors Liquidation, is a term that is commonly used to explain the insolvency procedure that results in a company being wound up at a meeting of its creditors. It differs from one where the Directors of the business petition the court to wind up the business. Whatever solution is taken, it is always advisable for the directors to take a lead when it comes to dealing with their company's insolvency.
The directors will involve an insolvency practitioner to help them ascertain of the company is insolvent. It is crucial that at the first sign of distress for a business, a review takes place as to whether the company can trade out of any difficulties. If it can't, then plans can be set in place to close it down. Two weeks notice of a meeting to close the business needs to be given to creditors, accompanied by a statement of affairs which sets out the assets and liabilities of the business. It will conclude that the business cannot be saved and that legally the directors are taking the correct steps in closing it down.
The creditors always vote for this to happen. Occasionally they may also request that an alternative liquidator be appointed, if they consider that the directors may have acted in a prejudicial manner, and that they do not trust the proposed liquidator to investigate thoroughly, although this is quite rare.
The liquidator will investigate the conduct of the directors, but if they have acted expeditiously, then they have nothing to fear.
