What,Company,Liquidation,and,w business, insurance What is Company Liquidation and when should it be used?

Small offices have unique needs, and thatincludes document shredding. Designed with the smaller business inmind, the Dahle 20314 is a cross-cut shredder that offers Level 3security and brings you into compliance with federal regulations. The As we all know to live in this world we have to perform some activity by which we can earn money. There are many activities by which we can earn money and meet the standards to live in this society. And from one of them is franchise.  Franc

If you do not want to continue running your businessor you think it is in difficulty and cannot continue to trade, then you need toget good information about your possible options. One area which you will needto consider is company liquidation. The purpose of this article is to explainin simple language what company liquidation is and when its use might beappropriate.Liquidation is simply the term used to describe theprocess of closing a company down. The company's trading is stopped and its assets are soldand turned into cash or "liquidated". There are different types of liquidation depending onwhether the company to be closed is solvent or insolvent. There are two simpletests to see whether a business is solvent. The cash flow test and the balancesheet test. The cash flow test asks whether the company is able to pay itscreditors as and when the debts fall due. If the answer is no, the company isinsolvent. The balance sheet test asks if there are more assets than money owedto creditors. If the answer is no, then the business is insolvent. If the company to be closed is solvent theliquidation procedure to be used is called Members Voluntary Liquidation or MVLfor short. Simply put, the members or shareholders of the business decide toclose it. The directors of the company have to make a sworn legal declarationthat the company is solvent and if assets need to be sold, to pay debts, this mustbe possible within 12 months. The business is closed and all outstandingcreditors paid. Any remaining assets or cash is then the property of theshareholders of the business to do with what they wish. You may question why a solvent business would beclosed at all. There are a number of reasons why this would happen. Perhaps theowner may simply want to close it because they no longer want to run it. May bethe company is a family business wherethe owners / parents have retired and children or family do not want to run thebusiness. Alternatively, a group of companies may need to be rationalisedrequiring a solvent business to be closed and its assets transferred intoanother company within the group. If a business is insolvent and no further investmentcan be found or other arrangements with creditors cannot be agreed, then actionmust be taken to close the company. There are two possible types of liquidationprocedure in these circumstances:The first of these is Creditors Voluntary Liquidationor CVL for short. A Creditors Voluntary Liquidation will normally be started bythe directors and or shareholders of the business. The shareholders appoint anInsolvency Practitioner who will call a meeting of the company’s creditors informingthem of the company’s insolvency and allowing them to appoint a liquidator oftheir choice. As such, the liquidation is approved by, and works for, thebenefit of the creditors. The Liquidator’s prime duty is to sell the assets ofthe company and distribute any proceeds to the company’s creditors. The Liquidatorwill close the company, cancel any outstanding leases make any remaining staff redundant.The second type of liquidation where a company isinsolvent is called Compulsory Liquidation – more commonly known as WindingUp.  The act of Compulsory Liquidation isstarted by an aggrieved creditor who has not been paid. Such action can bestarted by any creditor who is owed more than £750 which is not paid after astatutory demand for payment has been issued. The aggrieved creditor willemploy a solicitor who asks the High Court to hear the argument why thecompany should be wound up. This is called a Petition. Notice of the petitionmust be given to the company. Then if the debt is still not paid, a"hearing" is held in front of a High Court judge who then passes anorder to wind up the company compulsorily. An Official Receiver (or Liquidatorif appointed) will then close the company and sell any assets which will thenbe distributed across all of the company’s creditors. It is important to remember that the question ofwhether company liquidation is the most appropriate course of action can onlybe answered after a proper review of a company’s circumstances. If as aDirector, you believe that your business is in trouble, you should get furtheradvice from an expert as soon as possible. An important additional note for Company Directors inthis area is that you must be aware that you must not continue to allow acompany to trade which you know to be insolvent. If your company is eventually liquidatedbecause it is insolvent, the Liquidator will have a duty to review the conductof you as a Director to ensure that you have acted properly to minimise creditor’slosses. If the Liquidator decides that you as a director have acted badly, theycan accuse you of wrongful trading. If this is upheld, then you can be madepersonally liable for the company’s debts from the time you knew the companywas insolvent. As such, getting the appropriate advice about company insolvencyis a must.