Liquidation Process and Procedure

Need Liquidation Advice - Click hereThe liquidation process, also called a winding up procedure, results in the company ceasing to trade and being legally dissolved. The process of liquidation does vary depending on the type of liquidation but can be summarised as:

  • Company ceases to trade
  • Liquidation Process and ProcedureLiquidator takes possession of company assets including property and records
  • Liquidator investigates company affairs
  • Liquidator prepares list of creditors and monies owed
  • Liquidator prepares list of anyone obliged to contribute to the value of assets as part of the liquidation procedure
  • Liquidator realises the value of the company assets to meet outstanding debts
  • Creditors are paid in accordance with established guidelines
  • Any surplus funds distributed to the members
  • Liquidator delivers report to registrar of companies
  • Company is dissolved 3 months after report filed

There are 3 main types of liquidation:

  1. Creditors voluntary liquidation
  2. Members voluntary liquidation
  3. Courts appointed liquidation

The liquidation process is different for each and below you will find an overview for each type of liquidation:

Members Voluntary Liquidation Procedure

The reasons behind a decision to seek a Members Voluntary Liquidation [MVL] are different to that of a Creditors Voluntary Liquidation. In the case of a MVL the company is solvent and able to pay off it debts, usually within a 12 month period. A members’ voluntary liquidation procedure can be summarised:

  • The directors place the company in a MVL, making a statutory declaration of solvency
  • Declaration is sent to all shareholders, together with a notice of a meeting of shareholders, during which 75% of shareholders must vote in favour of the MVL for it to continue
  • The company ceases to trade and the liquidators duties and procedures come into effect

Creditors Voluntary Liquidation Procedure

A creditors voluntary liquidation [CVL] is appropriate where a company is unable to meet it’s debts as they fall due – i.e. insolvent. A CVL is the most common type of company liquidation in Ireland. The CVL procedure can be summarised:

  • Directors of the company agree upon liquidation
  • Notice is given to members and creditors and a shareholders’ meeting and creditors’ meeting is called respectively
  • Directors appoint a chairperson for the creditors meeting and shareholders meeting
  • A shareholders meeting resolves that the company is insolvent and a liquidator is appointed
  • A statement of affairs is compiled and presented by the liquidator at the creditors meeting, including the list of creditors and the amounts owed. Creditors at this point have the option to nominate an alternative liquidator
  • Company ceases to trade and the liquidators duties and procedures come into effect

In addition to a MVL and CVL, there is also a Court Appointed Liquidation. A court appointed liquidation is common when a creditor believes that the company is insolvent and that by continuing to trade the ability of the creditors to recover their debts will be adversely affected.

Need Liquidation Advice - Click hereThe above information for liquidation process and procedures is intended as a guideline only. We would always recommend that you seek professional liquidation advice as early as possible when considering a company liquidation.

You can talk to a liquidation specialist in confidence by calling 1890 256 733 or use the Call Back facility above.