How to Choose The Best Liquidator for Your Limited Company Liquidation

Choosing a liquidator for your limited company liquidation can be hard. You need to consider your options carefully before choosing your Insolvency Practitioner (IP) and proposing them to your company creditors.

Once appointed, the Insolvency Practitioner (liquidator) has almost complete control over the process, so it’s not a decision that should be made without considering all of your available options.

You should choose the best liquidator for your company by keeping 3 principles in mind;

1. Know the average cost across the market for a liquidation – if it sounds too cheap, then it probably is!
2. Make sure you know exactly what is included in the price and the level of service you can expect
3. Friendly liquidators that deflect your questions are likely to be those that will keep you in the dark throughout the process – find a pragmatic IP who is happy to go through everything before you sign on the dotted line

Liquidator’s priorities

Many directors are surprised to learn that by law, creditor’s rights must be prioritised throughout the liquidation process. This dictates that the liquidator’s position is to:

1. Mitigate any loss to creditors
2. Explore the company’s downturn

Of course, it is not always a comfortable position to be in as the director when anyone is taking over control of your company.

Furthermore, it is actually the creditors that appoint the liquidator officially rather than the Directors. This is because the process has their interests in mind rather than the director’s. Choose the best liquidator for you to nominate by being aware of this fact…

Insolvency rules

The insolvency laws must be followed by the liquidator – having said this, they should warn you of any problems that could arise beforehand. They are unable to look the other way when they become aware of problems, or else they run the risk of losing their licence.

However, they can advise prior to instruction of the problems that could crawl out of the woodwork and should discuss these with you openly.

Read – Guide to the Limited Company Liquidation Process

Choosing the best liquidator

Costs

This is the main point that we are asked about, so we will address this first. Company Voluntary Liquidation fees tend to start from the £4,000 + VAT and £5,000 + VAT mark, which is pretty standard across the market.

You should always be aware of what you are being quoted for – some companies do quote much lower charges for ‘liquidation’ when in reality they are proposing something entirely different…

There are those that charge £2,000 but fail to mention that they have spotted there is a Directors Loan Account which they will come for.

Other companies quote low introductory prices, without mentioning the costs that they will add on further down the line. Of course the lesson here is to always read the small print, as it is too late to argue once you have signed on the dotted line!

If you are asking for a liquidation quote, the figure should always quote the full amount for taking the case to completion, not simply the SoA (Statement of Affairs) fee.

Dissolution could be an alternative option to liquidation

Some firms also offer dissolutions (again at a much lower cost) but don’t make it clear that this is a completely separate process.

Dissolution can be a great solution for some companies, but of course you should be aware of what you are paying for. Dissolution is only appropriate for companies that have no funds or assets to pay for liquidation.

If you have found an IP (Insolvency Practitioner) or insolvency expert who is offering a low price, that’s great – just make sure you know exactly what’s included in the price before going ahead.

The good news is, if your company has assets worth more than the cost of the process you have chosen, then the fee can be taken from these and your personal finances shouldn’t need to be touched.

Another way to achieve this is to use your director’s redundancy payment to instruct the Insolvency Practitioner. Find out if you are eligible for redundancy pay here.

Get a free, no-obligation quote to liquidate your limited company

Level of service to expect

Unfortunately there are many firms out there that, once you have agreed to go ahead with a process, are difficult to get hold of.

You should be made aware of your case manager or administrator, and have a direct dial for them – we recommend that before you sign up, you give your contact a ring to ensure that you can to get hold of them easily.

Beware of ‘friendly’ liquidators

Of course, here we are not saying that IPs (Insolvency Practitioners) can’t be lovely people. However…

We would suggest that you are wary of those that are promising the world without highlighting any of the potential problems that could crop up within your initial conversations.

From our experience, to choose the best liquidator, statements such as ‘leave it up to me’ are not helpful, as you should be aware of what is happening at any given point. Someone that is happy to explain the ins and outs of the process is much preferable.

Those that point out issues will give you the chance to either resolve them, or ask for realistic ways in which to deal with these within the process, without this affecting you or any future directorships.

Once the company has entered liquidation, it becomes much more difficult to discuss your options with the IP [Insolvency Practitioner], because of creditors’ involvement.

Next steps

The Insolvency Practitioners (IPs) that work with us would not be recommended if they weren’t at the top of their game, expertly looking after all interested parties’ interests as far as possible.

By following our advice on choosing the best liquidator, you can’t go far wrong and you can just give us a call on 0800 975 0380 for some free advice if you are unsure what you need to do next.

Get a free, no-obligation quote to liquidate your limited company