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Can You Liquidate a Company For Free?

Are you facing the daunting task of liquidating a company with no money? You’re not alone.

Many company directors find themselves in this situation and wonder, can you liquidate a company for free?

Directors can liquidate their company through Administrative Dissolution, or “striking-off.” This process allows directors to control the dissolution and avoid unnecessary costs.

We explore the basics of liquidation, options for companies with no assets or funds, and the legal obligations and consequences you must be aware of.

Understanding Liquidation

Liquidation is a process of selling assets in order to repay creditors and bring a company to a close.

This may become necessary when a business is unable to recover from its debt through other methods such as financing, company administration, or a Company Voluntary Arrangement (CVA).

Compulsory liquidation is generally initiated by a creditor seeking to recoup funds from the company.

An insolvent company has the option of undertaking a Creditors’ Voluntary Liquidation (CVL) or a compulsory liquidation for liquidation purposes.

In both cases, an Insolvency Practitioner (IP) is appointed to oversee all control of the process and business concerns.

Upon a company entering liquidation, no legal proceedings may be initiated.

Should you not be personally liable for the debts of the company, creditors will be unable to get owed money or pursue any further action against you.

Selling Company Assets

The assets of a company may encompass physical property, equipment, inventory, cash, investments, and intellectual property.

By disposing of these assets, a company can settle its creditors and liquidate without incurring a cost.

This way, even insolvent companies have a chance to liquidate without further digging themselves into a financial hole.

Director’s Redundancy Pay

In certain situations, directors of limited companies may be eligible to receive redundancy pay.

This money can be used to help offset the financial costs associated with winding up petition dissolving a company if it is desired to shut it down.

By utilizing redundancy pay, directors can raise enough money, without dipping into their personal savings and liquidate a company for free.

Options for Companies with No Assets or Funds

For companies with no assets or funds, there are still ways to liquidate by using administrative dissolution or Creditors’ Voluntary Liquidation (CVL).

These options provide a lifeline for companies struggling with financial issues but lacking the assets or funds to cover liquidation costs.

Let’s explore these two strategies in more detail.

Administrative Dissolution

Administrative dissolution is a process for the liquidation of a company with no assets or funds.

The procedure for dissolving a company with no liabilities or assets entails presenting cessation accounts and having them removed from the Companies House register.

However, ensuring that the process is executed appropriately necessitates timely and accurate filing of documents.

Creditors Voluntary Liquidation (CVL)

Creditors Voluntary Liquidation (CVL) is another option for companies with no assets or money.

The difference between CVL and compulsory liquidation is that the directors of a company opt to initiate a CVL.

Which is then accepted by creditors. A CVL can be invoked when a company is judged to be insolvent and not capable of being restored to viability through restructuring.

Such circumstances must be thoroughly evaluated before opting for this resource.

The IP appointed in a CVL has three primary objectives.

Legal Obligations and Consequences

Directors must meet legal obligations to avoid personal liability and wrongful trading, and inform stakeholders and Companies House.

Understanding and adhering to these legal requirements and obligations is crucial to ensure a smooth liquidation process and protect yourself from potential repercussions, such as financial losses, legal fees, and possible criminal charges.

Personal Liability

Personal liability is the legal accountability of an individual for their actions or obligations, such as medical costs, legal fees, or damages arising from negligent acts or omissions.

To avoid personal liability, you may form a limited liability company (LLC) or other separate legal entity to protect your personal assets from being utilized to satisfy business debts or liabilities.

Adhering to all relevant laws and regulations is also crucial.

Wrongful Trading

Wrongful trading, per Section 214 of the Insolvency Act 1986, happens when directors let a company continue trading despite knowing it can’t pay its debts.

Wrongful trading can result in individual accountability for directors.

To avoid this, it’s imperative to refrain from disposing of company assets at a lower rate than market value and abstain from procuring any credit or loans when the company is insolvent.

Informing Stakeholders and Companies House

To liquidate a company with no money, directors must raise funds personally, use redundancy pay, and follow the correct procedures.

When raising funds for liquidator fees, it’s essential to adhere to director obligations to reduce the possibility of personal accountability in the future.

In the event that a company is insolvent and unable to cover the liquidator fees, the responsibility for paying the liquidator fees falls to the company directors.

Directors should also be aware of the consequences of personal guarantees when a company is being liquidated and entering a CVL.

Creditors may decide to call in personal loan guarantees, which can impact your credit rating and personal financial position.

Ensuring that you stay informed and communicate effectively with stakeholders and Companies House is critical to navigating the liquidation process with no money successfully.

Steps to Liquidate a Company with No Money

To begin the process of liquidating a company with no money, the first step is to ascertain if there are any assets that can be sold to generate funds.

If there are assets, they should be disposed of in a manner that maximizes their value to repay creditors.

If there are no assets, the subsequent step is to notify creditors of the company’s termination.

By following these steps and considering the options discussed earlier, like administrative dissolution and Creditors’ Voluntary Liquidation (CVL), you can navigate the process of liquidating a company with no money.

Although this liquidation costs may seem like a daunting task, with the right guidance and a clear understanding of your legal obligations and available options.

It is possible to liquidate a company for free and move forward from financial difficulties.


In conclusion, liquidating a company for free can involve selling assets, using director redundancy pay, and considering methods like administrative dissolution and Creditors’ Voluntary Liquidation (CVL).

Understanding and meeting your legal obligations, such as avoiding personal liability and wrongful trading, is crucial in navigating the liquidation process smoothly and protecting yourself from potential repercussions.

While liquidating a company with no money may seem like a daunting task, with the right guidance and a clear understanding of the available options, you can successfully overcome financial difficulties and move forward.

Remember, with determination and the right approach, even the most challenging situations can be resolved, and you can emerge stronger and wiser.

Frequently Asked Questions

Do you have to pay to liquidate a company?

There are fees associated with liquidating a company which varies depending on the complexity of the task and the amount of time invested.

Therefore, you will need to pay to liquidate your business as a company.

What is the cheapest way to liquidate an Ltd company?

The most cost-effective way to liquidate a Limited company is to allow a creditor to force the limited company itself into compulsory liquidation.

This is not only the cheapest option, but it can also be completed more quickly than voluntary liquidation.

What happens if I can’t afford to liquidate my company?

If you cannot afford to liquidate your company, then the best course of action would be to seek professional advice from a licensed insolvency practitioner.

The expert will be able to advise on the best approach and provide tailored guidance on the specific situation your business is facing.

Can I liquidate a company myself?

Unfortunately, it is not possible to liquidate a company yourself.

According to the Insolvency Act 1986, it must be done through the appointment of a qualified insolvency practitioner who can take charge and manage the process.

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