Ending the business

If it is decided that the business cannot be rescued then there are 4 main routes to ending the life of the Company. The route that can be used depends on whether the business is solvent; i.e. whether it can pay all of its liabilities.

In addition to the following 4 routes the CVA, Administration and Receivership process can be used to close a business down.

Solvent business

Dissolution - an application can be made to Companies House to strike a company off the register of Companies. This is not usually recommended for Companies that have been trading.

Members Voluntary Liquidation ("MVL") - this is a process dealt with by the Insolvency Act that effectively ends the life of a company. Unlike dissolution it provides some protection to directors and shareholders of a solvent business.

Insolvent businesses

Voluntary Liquidation - this is a process that is usually started by the directors. A liquidator would be appointed by the shareholders of the Company and creditors of the business would either ratify this appointment or appoint their own liquidator. A liquidator would normally close the business and sell off its assets.

Compulsory Liquidation - this process is usually started by one or more creditors of the business. The official receiver would be appointed by court and if there are assets to realise a professional liquidator would be appointed.

Once the liquidation process is complete the Company will normally be dissolved and cease to exist.