How to use a liquidation lawyer

 

A company that is failing can decide to put itself into what is called liquidation, in which the assets of the company are sold off to pay its outstanding debts. It is important to carry out the liquidation process carefully and in accordance with the current laws regarding insolvency.

A liquidation lawyer is the ideal person to help you dispose of your company’s assets.

What is liquidation?

There are three types of liquidation that you can choose to use. If you're uncertain about how these types of liquidation differ, a liquidation lawyer can explain these to you, and help you decide which one is right for your business.

In this type, the director of the company decides that liquidation is the only option to pay the company’s debts.

In this type of liquidation the business is still solvent in that it can still pay its debts, but the shareholders of the company decide to put it into liquidation anyway, as they do not believe the company can continue to make profit over the medium-to-long term. A liquidation lawyer can help you draw up the documents you’ll need for this type of liquidation.

Here, one or more of your business’s creditors will go to the court to ask it to force your business into liquidation. This can happen, as the assets in your business will be sold, so your creditors have a chance of getting the money your business owes them.

You don’t have to accept this type of liquidation, as you have the right to contest this in court. Always ensure you are fully represented by a liquidation lawyer if you do decide to dispute this type of liquidation.

Compulsory liquidation

Any business that receives a compulsory liquidation order from the courts should seek advice immediately from a liquidation solicitor. They have detailed knowledge of company legislation and can inform you whether the court order is valid, and what your options are.

In most cases you have the right to contest the court order. Your liquidation solicitor can:

  • Lodge the objections with the court
  • Help you to prepare your case in order to fight the liquidation order itself

Note you will have to show - with documentary evidence - that your business is not insolvent and can pay its debts. This would then mean the compulsory liquidation order is not valid. Your liquidation solicitor can help you to prepare the evidence you will need to put before the court that issued the original order.

In many cases you will also have to deal with the Official Receiver’s Office, as the court usually hands compulsory liquidation orders to them as they handle the day-to-day operation of these types of insolvency cases.

Whichever type of liquidation befalls your business it is vitally important to ensure you have the help and support of a liquidation lawyer. They have long experience of dealing with businesses that become insolvent. If you do have to liquidate your business, a liquidation lawyer can make the process less painful than if you attempted to handle this yourself. And if your business is given a compulsory liquidation order, your solicitor can help you fight the order through the courts.

Do you have more questions? See our FAQ page on liquidation for more questions answered.

Is your business about to go into liquidation and you are requiring immediate financial advice? Contact Law can put you in touch with a company and commercial law specialist who can advise on which of the three types of liquidation you should choose. Please call us on 0800 1777 162 or complete the web-form above.

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