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Compulsory Liquidations

If your company owes money to its creditors and falls behind on payments, it could be served with a statutory payment notice

Is your company no longer able to keep up with its liabilities? If your company does not have sufficient cash to pay its creditors and is no longer viable, it faces a serious risk of being forced into the liquidation process.

There are two types of company liquidation: Creditors Voluntary Liquidation, which is a voluntary liquidation process started by a company’s directors, and Compulsory Liquidation.

Liquidating your company means that your company will be closed and struck from the register. If you would like to start the liquidation process or have concerns about liquidation, contact our business recovery team for advice and assistance. 


If you feel your business is in financial difficulty it is important to deal with it immediately. Call now on 0845 676 9033 for free confidential advice, or visit our contact us page.

Introduction to FRP

  • What is liquidation?

    Liquidation is a process that involves the closure of your company and the sale of its assets in a liquidation sale. Your company’s assets are sold to raise money, to pay the company’s creditors.

    The liquidation process can be voluntary or compulsory. Both processes will result in the dissolution of your company and the sale of its assets, but there are some key differences between the two liquidation processes.

    Liquidation is a suitable option for companies that are insolvent – either in terms of cash flow or on the balance sheet – and have a business model that isn’t viable any longer.

    If your company is insolvent, liquidation doesn’t need to be the solution. There are a variety of options for saving your company, including administration and a Company Voluntary Arrangements(CVA).


    Compulsory Liquidation

    If your company owes money to its creditors and falls behind on payments, it could be served with a statutory payment notice. This is a final demand made by a creditor for your company to pay its debts, or else face legal action.

    Should your company fail to keep up with its liabilities, its creditors can serve it with a winding up petition. This document allows the company’s creditors to initiate the Compulsory Liquidation process and wind the company up through the courts.

    Compulsory liquidation will lead to the sale of your company’s assets and the end of the company. During the liquidation process, your company will be investigated in order to determine if fraudulent or wrongful trading charges are appropriate.


    Creditors Voluntary Liquidation

    A Company Voluntary Liquidation (CVL) involves your company’s directors concluding that the company is insolvent and choosing to voluntary enter the business into liquidation. The company’s assets are sold by a liquidator in order to pay its creditors.

    A CVL is generally the preferred option for insolvent and unviable companies, since the likelihood of fraudulent or wrongful trading charges is far lower and company directors are able to set up new companies and trade.

    Despite the benefits of Creditors Voluntary Liquidation, it’s still important that your company’s directors seek expert advice from FRP to understand the liquidation and dissolution process.


    What are the benefits of liquidation?

    While liquidation involves the dissolution of your company, it isn’t always a bad or undesirable outcome. If your company is no longer viable and needs to stop trading, liquidation provides a means by which its creditors can be partially repaid.

    Not all companies can be saved, and it’s sometimes best to close your company if it no longer has a viable future. The Creditors Voluntary Liquidation process lets you bring your company to an end, without facing Compulsory Liquidation issues.


    Contact us to learn more about liquidation

    If your company is cash flow or balance sheet insolvent and doesn’t have any means of recovering, starting the Creditors Voluntary Liquidation process is a good way to bring the company to an end.

    Our business recovery experts have helped hundreds of UK business owners close their companies through liquidation. Contact us now for a free initial meeting to learn about the numerous options available to you to close your company or begin its recovery.