How to liquidate your construction company in England

How to save a construction business that is facing insolvency

When a corporation becomes insolvent, it might be feasible to save it and avoid liquidation. There are a variety of choices accessible in this regard, but as previously stated, it is critical to get assistance soon from a licensed insolvency practitioner.

For example, if a construction company is under constant pressure from creditors, it may be eligible to go into a company voluntary arrangement rather than facing compulsory liquidation. This allows time to assess the issue and make preparations for the future, including the appointment of a liquidator to manage the closure. But what if there is no prospect of rescue? It might be necessary to initiate compulsory liquidation, especially if a winding-up petition has been filed.

Insolvent Construction Companies and Creditors’ Voluntary Liquidation 

Creditors are subsequently refunded as much as feasible, and the company’s name is removed from the Companies House registry by the appointed liquidator. To reduce creditor losses, company directors must quit operating when the company enters insolvency, and a licensed insolvency practitioner should be appointed to handle the liquidation process.

The CVL process 

• A meeting of shareholders is convened, and 75% (by value) must agree to approve a winding-up resolution.
• A licensed insolvency practitioner is officially designated to liquidate the company, providing essential liquidation and debt advice.
• The winding-up resolution is sent to Companies House and advertised in the Gazette
• A creditors’ meeting is scheduled within 14 days of the resolution. This meeting must be advertised in the Gazette, according to statutory requirements.
• At the creditors’ meeting, a Statement of Affairs is provided, which details the company’s financial status, aiding in the winding up petition. This will also be sent to the Companies House.
• During the liquidation procedure, creditors’ interests take priority over those of directors, shareholders, and members, according to statutory guidelines. Directors must behave with integrity and give the IP with all necessary information to complete this process, to avoid the risk of the company becoming an insolvent company.

Solvent Construction Companies and Members’ Voluntary Liquidation 

When a solvent construction company needs to close, liquidation can be an effective solution. Members’ Voluntary Liquidation allows you to maximise profits from your business because distributions are treated as capital rather than income. Consulting with McLaren Insolvency Practitioners can help you navigate this process. A licensed insolvency practitioner can help manage this liquidation process, offering necessary liquidation and debt advice.

A shareholder’s tax burden can be reduced even further to an effective rate of 10% if they are eligible for Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs Relief, when they choose to wind up the company. MVL is often appropriate for businesses with retained profits of £25,000 or greater, especially when a shareholder seeks to wind up the company.

The MVL process

• Employ the services of a skilled insolvency practitioner to advise and supervise the process.
• Hold a board meeting to examine voluntary liquidation as an option, particularly considering advice from HMRC.
• The majority of directors sign a Declaration of Solvency, which confirms that the company can repay all of its debts within 12 months of the liquidation date. This ensures that the company name remains in good standing.
• A Liquidator is chosen during an Extraordinary General Meeting with shareholders when a resolution is voted to wind up the comapny if 75% of shareholders (by value) agree. The company may also need to apply to the court to finalise this decision.
• The liquidator sells the company’s assets, settles all creditors in full, and allocates any remaining capital to owners.

McLaren Insolvency Practitioners offer the professional advise and skills required when a business is facing financial difficulties, as well as assistance to company directors in liquidating assets where necessary.