We can also assess your situation and recommend an alternative course of action if you’re interested in keeping the company in business.
A well-established tile and bathroom retailer operating primarily in Sussex has been entered into liquidation having become unable to cope with a serious financial crisis in recent weeks. David Sullivan, the co-owner of West Ham United, has been adjudged at a tribunal to have used the football club to avoid paying £700,000 in taxes.
Sometimes company directors will pursue a voluntary liquidation because “there isn’t enough money to repay all of the debt” or “rescuing the company will be too costly.” While these may seem to be legitimate justifications, the fact still remains that directors are legally obligated to act in the best interests of creditors as a whole.
Obviously, hastily ending a company through a CVL is not in the best interest of creditors, as most of the time it results in debts going unpaid.
If you’re considering liquidation as an easy way to avoid the responsibility of repaying debt, you may want to look into other options, as you could be putting yourself at risk.
For this reason a CVL should be considered as a last resort, only after alternative options that would allow the company to continue trading have been examined (i.e.
– pre-pack administration, company voluntary arrangement (CVA), or asset financing).
After the company ceases trading and is liquidated all brand recognition will be lost, so all marketing efforts in the history of the company will have been in vain.
If you add up the wasted advertising expenditure, it becomes clear that ending the company is more costly than expected.