Discover Expert Business Liquidation Advice from McAlister & Co
If your company is struggling financially and you’re exploring options for closure, you’re not alone – and you’re certainly not without support. Business liquidation can feel daunting, but with the right guidance, it can also be a structured, fair, and often necessary step toward resolution and recovery.
At McAlister & Co, we specialise in helping directors navigate the complexities of liquidation. Whether your business is insolvent and can’t pay its debts, or you’re looking to close a solvent company in the most tax-efficient way, our expert team is here to help you every step of the way.
So, read on to find out everything you need to know about liquidating a business in the UK: from the different types of liquidation and how each one works, to your responsibilities as a director, and why choosing the right support is essential.
What Is Business Liquidation?
Liquidation is the formal process of closing a company, realising its assets, and distributing the proceeds to creditors and shareholders. It involves appointing a licensed insolvency practitioner to take control of the business, handle all creditor communications, and ensure the process follows legal and regulatory requirements.
There are two key reasons why a business might enter liquidation:
- Insolvency: When a company can’t pay its debts as they fall due, or its liabilities exceed its assets.
- Solvency: When the company is financially healthy, but the directors or shareholders decide to close for strategic, personal, or structural reasons.
When Is Liquidation the Best Option?
Liquidation is often the best path when your business can no longer pay its debts, creditor pressure is escalating, or there’s no realistic route back to profitability. If continuing to trade would worsen your creditors’ position and potentially expose you to personal risk, then liquidation allows you to draw a line under the business in a legal, structured, and fair manner.
That said, liquidation isn’t always the only solution. At McAlister & Co, we’ll assess your company’s full financial position and explore all potential recovery options before recommending liquidation.
Depending on your circumstances, you may be able to consider alternatives such as a company voluntary arrangement (CVA), business refinancing, Time to Pay (TTP) arrangements with HMRC, or even pre-pack administration if parts of your business remain viable. Our priority is to help you make an informed, confident decision that protects your future – whether that’s rescue or closure.
What Liquidation Solutions Are Available?
There are three main types of business liquidation in the UK: creditors’ voluntary liquidation, compulsory liquidation, and members’ voluntary liquidation.
1. Creditors’ Voluntary Liquidation (CVL)
Best for: Insolvent companies that can no longer trade and want to avoid compulsory liquidation.
A creditors’ voluntary liquidation is initiated by the company directors and approved by shareholders. It’s a proactive step to wind up the business when it can’t pay its debts. A licensed insolvency practitioner is appointed to manage the process, deal with creditors, and sell any company assets.
Creditors’ Voluntary Liquidation Process:
- Board meeting to decide on liquidation.
- The company ceases trading.
- Shareholder resolution passed (75% needed).
- A liquidator is appointed by deemed consent or if necessary, a creditors’ meeting is held to appoint the liquidator.
- The liquidator realises assets, communicates with creditors, and distributes funds.
- Directors assist the liquidator and may be asked to complete reports and attend interviews.
- After all matters are dealt with, the company is dissolved.
Advantages of a Creditors’ Voluntary Liquidation:
- Gives directors more control than compulsory liquidation.
- Reduces the risk of court proceedings.
- Directors can demonstrate they acted responsibly.
- Stops creditor pressure and legal action.
- Can include redundancy pay for directors (if eligible).
2. Compulsory Liquidation
Best for: Cases where creditors petition the court to force company closure.
Compulsory liquidation occurs when a creditor (owed £750 or more) issues a winding-up petition due to unpaid debts. If granted, the court issues a winding-up order and appoints an Official Receiver to liquidate the business. A private insolvency practitioner may later be appointed.
If you receive a winding-up petition, get advice immediately – there may still be time to enter a CVL and regain some control.
Compulsory Liquidation Process:
- A creditor issues a statutory demand or goes directly to petition.
- A court hearing is held to decide the outcome.
- If successful, the court appoints the Official Receiver.
- Directors must immediately stop trading and hand over company assets and records.
- A private insolvency practitioner may later be appointed by creditors.
Risks of a Compulsory Liquidation:
- Directors lose control over the process.
- It will trigger investigations into director conduct.
- It’s more public and can affect business reputation.
3. Members’ Voluntary Liquidation (MVL)
Best for: Solvent companies looking to close in a tax-efficient manner.
A members’ voluntary liquidation is used when a business is solvent and able to pay its debts in full within 12 months. It’s often chosen for business closure during retirement, restructuring, or when a company is no longer needed. An MVL enables directors to release retained profits in a tax-efficient way, often paying just 10% Capital Gains Tax through Business Asset Disposal Relief.
Members’ Voluntary Liquidation Process:
- Directors make a statutory declaration of solvency.
- A shareholder meeting is held to approve liquidation.
- A licensed insolvency practitioner is appointed as liquidator.
- The company’s assets are sold, liabilities paid, and remaining funds distributed to shareholders.
- Capital distributions are reported to HMRC.
- The company is dissolved once all matters are finalised.
Advantages of a Members’ Voluntary Liquidation:
- Tax-efficient exit strategy
- Directors control the process
- Efficient way to release value
- Reduces ongoing admin and compliance costs
The Liquidation Process: What to Expect
While the specifics vary slightly depending on the type of liquidation, the general steps of the liquidation process are:
Initial Advice & Assessment
Everything begins with a confidential consultation. When you enlist the help of McAlister & Co, we’ll review your company’s financial position, debts, cash flow, and any outstanding liabilities. From here, we’ll advise you on all available options, including restructuring, rescue solutions, or voluntary liquidation if that’s the most appropriate route.
Our role is to help you understand your duties, obligations, and protections – and to give you the peace of mind that comes with knowing where you stand.
Board Resolution & Shareholder Approval (for voluntary liquidation)
If you proceed with a voluntary liquidation (CVL or MVL), the directors must formally agree to the process in a board meeting. In an MVL, they must also sign a statutory declaration of solvency. Shareholders then pass a resolution – requiring a 75% majority – to wind up the company. In a CVL, a creditors’ decision process (usually a virtual meeting or correspondence) follows, where creditors confirm the appointment of the liquidator.
Appointment of a Liquidator
Once appointed, the liquidator (a licensed insolvency practitioner) assumes full legal control of the company. Directors step back from day-to-day management. The liquidator’s responsibility is to act in the interests of creditors (in insolvent cases) or shareholders (in solvent cases) whilst also complying with all legal obligations.
Asset Realisation
The liquidator will identify, secure, and value all company assets – such as equipment, vehicles, stock, property, intellectual property, and debts owed to the company. These assets are then sold or collected, and the proceeds are used to cover the costs of the liquidation and repay creditors. In an MVL, surplus funds after settling liabilities are distributed to shareholders.
Creditor Notifications & Claims
Creditors are notified of the liquidation and invited to submit formal claims. The liquidator will review and verify each claim before any payments are made. In a CVL, creditors are paid according to a strict legal order – beginning with secured creditors, then preferential creditors (like employee wages), and finally unsecured creditors.
Director Reports & Investigations (if applicable)
In insolvent liquidations, the liquidator is legally required to review director conduct in the lead-up to insolvency. This includes checking for wrongful trading, preferences, undervalued transactions, or breaches of duty.
You’ll be asked to complete a questionnaire and attend a director interview. If you’ve acted responsibly and in the interests of creditors, you’re unlikely to face any issues – but this stage ensures that all parties are treated fairly and that the law is upheld.
Distributions to Creditors/Shareholders
Once assets are sold and costs covered, funds are distributed. In a CVL or compulsory liquidation, the funds are distributed to creditors in legal priority order, whereas in an MVL, they are distributed to shareholders, who often benefit from capital gains treatment and potential tax reliefs. If there are insufficient funds to pay all creditors, each receives a proportional share of what’s available.
Closure
Once all matters are resolved – including tax clearances, investigations, and distributions – the liquidator prepares final reports for Companies House and creditors or shareholders. The company is then formally dissolved and removed from the Companies House register, ending its legal existence.
Why Choose McAlister & Co?
Choosing the right insolvency practitioner can make a world of difference – not just in terms of outcomes, but also in how you feel throughout the process. At McAlister & Co, we are:
- Licensed & Regulated Experts: All our insolvency practitioners are fully licensed and regulated by recognised UK bodies. You’ll receive advice you can trust – based on experience, expertise, and the latest legislation.
- Solutions-Focused: We explore every option available to you before proceeding to liquidation. If there’s a way to rescue or restructure your business, we’ll find it.
- Compassionate & Non-Judgemental: We understand how tough it can be to close a business. Our approach is always understanding, respectful, and free from blame.
- Clear, Honest Advice: No jargon. No pressure. Just clear explanations of your rights, obligations, and choices – so you can make informed decisions.
- National Reach, Personal Service: With clients across the UK and a dedicated support team, we combine national strength with local, personal service.
How to Liquidate a Business: Expert Advice from McAlister & Co
Whether you’re considering liquidation, facing pressure from creditors, or just unsure about your next steps, we’re here to support you with clear, confidential advice. We’ll talk you through your options, help you understand your responsibilities, and support you in making the best decision for your future – professionally and personally.
Speak to a licensed expert today. Contact McAlister & Co for a free, no-obligation consultation.
Liquidation FAQs
Can I liquidate my company myself?
No. Liquidation must be handled by a licensed insolvency practitioner. DIY closure isn’t possible where debts are involved.
Will I be personally liable for company debts?
In most cases, no. Limited liability protects you unless there’s evidence of wrongful trading, fraud, or personal guarantees.
Can I start a new company after liquidation?
Yes – unless you are disqualified as a director. However, using a similar name may require legal permission due to “phoenix company” rules.
Will liquidation affect my credit rating?
Company liquidation won’t impact your personal credit score unless you’ve signed personal guarantees. However, your name will appear in public records like Companies House.
What if my company has no assets?
Even if there’s nothing left to sell, you can still enter liquidation. Our team can explain low-cost options in these cases.
Can directors claim redundancy?
Yes, in some CVL cases, directors who are on PAYE may be eligible for redundancy pay and other statutory entitlements.
How long does liquidation take?
Most liquidations take 6–12 months, though complex cases may take longer. We’ll give you a realistic timeline based on your situation.
Is liquidation the same as administration?
No. Administration is a rescue procedure to protect a company while trying to save it. Liquidation is the final closure of the company.
Can I stop a winding-up petition?
Yes – if you act quickly. Options may include paying the debt, disputing the claim, or entering a CVL before the court date.
