When a company is unable to pay its debts as they fall due, a director’s duties shift from the management of the company for the benefit of the shareholders, to ensuring the company’s creditors are not disadvantaged by the company continuing to trade.
The directors should seek and comply with professional advice from their auditors and solicitors regarding any decision to continue trading for an interim period.
If the directors conclude that the company does not have a reasonable prospect of survival by continuing to trade, they are obliged to wind up the company by putting it into liquidation. This process is called a “Creditors Voluntary Liquidation”.
A summary of the process is as follows:
The procedure for a Creditors’ Voluntary Liquidation is prescribed in the 2014 Companies Act and strict adherence to the statutory framework is required.
If you are a director or shareholder of a company which is insolvent or you are a creditor of such a company, Mark Woodcock and Joanne Cooney from Fieldfisher’s experienced Insolvency Department can advise you on your rights, obligations and the prudent course of action to be followed.
Website by Open