Company liquidation

[tamborine]

Does the business cease instantly or do the liquidators run the business. What happens to income/orders/payments/wages/debts etc. What happens to the directors, are their assets/home seized?

[Buenchico]

I assume that you're referring to a limited company. The key reason that anyone sets up such a company is that it divorces the directors from direct financial responsibility for the affairs of the business. (i.e. unlike a sole trader running a corner shop, the personal assets of the people running the business are completely separate to the business assets). The directors could each have millions of pounds in the bank, with a dozen houses each, together with private jets and massive yachts. Those assets are completely separate from the assets (or lack of them) of the company and can't be touched by anyone who is owed money by the company (unless the failure of the company can be proved to be due to criminal actions by the directors).

When a company goes into liquidation, it is the duty of the liquidator to wind up the company's affairs. That means that the business ceases trading. The liquidator has to call in all of the assets of the company and distribute them among those who are owed money.

However 'liquidation' is not the same as 'administration'. If a company goes into administration, the administrator will (wherever practical) try to keep the business going, while a resolution to the company's financial problems is sought (possibly by getting creditors to accept a certain percentage of what they were owed, as full settlement of debts, together with dismissing staff or selling-off loss-making parts of the firm). If the administrator is successful, the company can eventually come out of administration and continue trading normally. Otherwise the company will be placed into liquidation.

More here:
http://www.companiesh...out/gbhtml/gpo8.shtml

Chris

[buildersmate]

However directors have a duty to operate within the law and to certain standards and it is perfectly possible that those directors who are also shareholders of a business are pursued following failure if there is evedence that funds have been syphoned off unlawfully.

[tamborine]

thanx for the info - will need to watch this company.