2. Creditors’ voluntary liquidation

A director can propose a creditors’ voluntary liquidation if:

the company can’t pay its debts (it’s ‘insolvent’)
enough shareholders agree
This means the company will stop trading and be liquidated (‘wound up’).

Get shareholders’ agreement
You must call a meeting of shareholders and ask them to vote.

75% (by value of shares) of shareholders must agree to the winding-up to pass a ‘winding-up resolution’.

Once the resolution is made there are 3 steps you must follow.

  1. Appoint an authorised insolvency practitioner as liquidator to take charge of liquidating the company
  2. Send the resolution to Companies House within 15 days.
  3. Advertise the resolution in The Gazette.

Your responsibilities as a director will change.

Hold a creditors’ meeting
You must have a meeting with all the creditors within 14 days of the winding-up resolution.

At least one of the following must also be there:

  • another director
  • the company secretary
  • the liquidator

You must tell the creditors about the meeting at least 7 days before it happens and advertise it in The Gazette.

At the meeting your company’s creditors can:

  • question company directors about the company’s failure
  • suggest an alternative liquidator

You must present the statement of affairs at the meeting. This gives details of the company’s situation and assets. Use:

After the meeting, give the statement to the liquidator who will send it to Companies House or to the Accountant in Bankruptcy for companies in Scotland.

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