The cause of a company’s insolvency can include factors such as the loss of a major customer, a lack of profitability due to below cost pricing by competitors, exchange rate movements and other factors.
Whatever the cause of the company’s insolvency, much of the stress and anxiety can be reduced if the directors seek advice from Professionals.
In the first instance, we recommend that directors seek advice from their existing accountants, who will have had experience of advising similar companies previously.
Running at about ten per week in this country, Creditors’ Voluntary Liquidations remain the most common way for directors and shareholders to deal voluntarily with their company’s insolvency. The procedure allows directors to deal with the winding up of their company in a responsible manner.
Once the directors take a decision to wind up the company, there are certain formal legal steps that must be taken. A formal meeting of the shareholders needs to be held to put the company into liquidation and to appoint a liquidator.
A creditors’ meeting must also be held. Notices of the meeting of creditors must be sent by post to the creditors at least 10 days before the date of the meeting with proxy forms. Notice of the creditors’ meeting must also be advertised in two daily newspapers circulating in the vicinity of the registered office or principal place of business of the company.