A Guide to Creditors Voluntary Liquidation

The Procedure

There are 3 meetings required to place a company into Creditors’ Voluntary Liquidation and the directors should consult a firm of insolvency practitioners to advise and assist them through the process.

The 3 meetings are:

  1. Board meeting
  2. Members meeting
  3. Creditors meeting

Board Meeting

A board meeting is held where the board of directors resolve that the company is unable to meet its liabilities as they fall due and it is advisable to wind up the company’s affairs. Accordingly a General Meeting (GM) must be called for the members of the company to consider the conclusions reached by the directors and agree that it is advisable to wind up the company via a creditor’s voluntary liquidation. A meeting of the company’s creditors is also called in order that the creditors may vote on their choice of liquidator and question the directors on the reasons for failure of the company.

A director will be nominated to chair the meeting of members and creditors and verify the statement of affairs − a statement listing the assets and liabilities of the company to be drawn up to a date not more than 14 days before the members meeting.

The date for the meeting of members will be at least 16 days from the date of the board meeting as members must be given 14 days notice for an GM where an special resolution is to be proposed in accordance with the Companies Act 1985. This time limit can be shortened with the written consent of at least 95% of shareholders.

The date for the meeting of creditors must be within 14 days of the meeting of members. It is normal practice to hold the meeting of creditors immediately after the meeting of members.

RNF Business Advisory Limited will draft and provide the necessary board minutes for the meeting of the board of directors and also prepare the required notices to members and creditors in order to convene the required meetings to place the company into liquidation.

Members Meeting

The members meeting will consider the conclusions reached by the directors at the board meeting and review the statement of affairs. If they then consider it appropriate, they will pass a special resolution to wind up the company. An ordinary resolution will then be passed appointing a liquidator. The liquidator will, in most circumstances, be an insolvency practitioner from the firm who were instructed to assist the directors in placing the company into voluntary liquidation. Shareholders are able to nominate a different liquidator. If this happens a simple majority vote will decide who is appointed.

Meeting of creditors

The creditors’ meeting is held primarily to enable creditors to ratify the appointment of the liquidator of the company, but it also allows creditors the opportunity to question the directors about any aspect of the company and bring to the attention of the liquidator information that he may find useful in carrying out his duties. The directors present a report detailing the history of the company together with other pertinent information. The statement of affairs is also made available to creditors.

The director nominated to chair the meeting of creditors at the initial board meeting must do so under Section 99 of the Insolvency Act or the director is liable to prosecution and a fine of up to £5,000 but in practice it is normally the nominated Liquidator that conducts the meeting.

Preparation of document required for the meetings of creditors

RNF Business Advisory Limited will either assist you in preparing the statement of affairs from the information provided to us or instruct a third party to prepare this on your behalf. The directors will be responsible for the contents of the statement of affairs and failure to provide us with the required information to allow the documents to be prepared; will result in no statement of affairs being presented. Failure to prepare the statement of affairs is an offence under Section 99 IA86 and the directors can be liable to a fine up to £5,000.

Working with you

We will work with you to explore your situation in detail and provide clear, jargon-free, honest advice. Rest assured, anything discussed with us remains confidential.

All initial consultations are free of charge and without obligation.

When you need help

Call Ruth on 01622 764 612
Call Filippa on 020 7253 7171

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