Closing Your Limited Company: A Clear Guide

Whether your business has naturally come to the end of its lifecycle or you are facing insurmountable financial challenges, making the decision to close your company is a significant step. It is essential that the closure is handled correctly, professionally, and in a way that meets all your legal duties as a director.

Our team of licensed insolvency practitioners provides clear, practical advice on the right way to close your business. We will guide you through the process, ensuring an orderly conclusion that achieves the best possible outcome for directors, shareholders, and creditors. The path you take depends on one key question: is your company solvent or insolvent?

Discuss Your Company Closure Options

Path 1: Closing a solvent company (Members' Voluntary Liquidation - MVL)

If your company is solvent, in other words, has more assets than liabilities, but you wish to close it down - perhaps for retirement, to pursue new ventures, or because it has served its purpose - an MVL is the most tax-efficient and orderly way to do so.

What is a Members' Voluntary Liquidation (MVL)?

An MVL is a formal process used to close down a solvent company and distribute its accumulated profits and assets to its shareholders. It allows shareholders to benefit from Business Asset Disposal Relief (formerly Entrepreneurs' Relief), meaning they are taxed at a much lower rate than if the funds were drawn as a dividend.

When is an MVL the right choice?

• You are planning for retirement and wish to extract the value from your company.
• You are closing a contractor company or a special purpose vehicle (SPV).
• Your company's purpose is complete, and it is no longer needed.
• The business has significant assets and retained profits to distribute.

The process & benefits of an MVL:

We work closely with you and your advisers to manage the entire process smoothly. This includes assisting with the disposal of any remaining assets to ensure the subsequent MVL can proceed efficiently, enabling the maximum return for shareholders.

Path 2: Closing an insolvent company (Creditors' Voluntary Liquidation - CVL)

When a business is in significant financial distress and cannot be rescued, a CVL is the most common procedure for directors to formally close the company. Instigating a CVL demonstrates that you understand  your legal duties and are acting responsibly by taking action to protect the interests of your creditors.

What is a Creditors' Voluntary Liquidation (CVL)?

A CVL is a director-led process to wind up an insolvent company. The directors choose to place the company into liquidation, and a licensed insolvency practitioner is appointed to realise the company's assets for the benefit of its creditors.

When is a CVL the right choice?

• The company cannot pay its debts as they fall due.
• The company's liabilities are greater than its assets.
• There is no viable opportunity to rescue the business through restructuring or Administration.
• You are facing overwhelming creditor pressure and need to take decisive action.

The process & our support:

Placing a company into CVL can be a very stressful and difficult situation. Our team is here to guide and support you through every step:

• Employee support: We guide directors and employees through the redundancy process, ensuring staff can claim what is owed to them from the Redundancy Payments Service as quickly as possible.
• Asset realisation: We work to achieve the best possible return for creditors from the company's assets.
• Contentious matters: In cases where there are allegations of director misconduct, our experienced team can act on behalf of stakeholders to investigate any potential wrongdoing, which may lead to additional recoveries for creditors.

Get Free, Confidential Insolvency Advice

Choosing the right path to close your company is a critical decision. Contact our team of licensed insolvency practitioners today for a free, no-obligation discussion about your specific circumstances.