06/02/2025
Insights
What is company liquidation?
Liquidation is a formal insolvency procedure to close a limited company. The type of liquidation depends on whether your company is solvent or insolvent. The process of creditors voluntary liquidation (CVL) is a voluntary process used to close insolvent businesses. A business is classed as insolvent when it can’t pay its debts, therefore requiring the director to take necessary action to repay creditors by way of liquidation. Compulsory liquidation occurs when companies receive a winding up order granted by the court to forcibly close a business which owes £750 or more to a creditor.
Alternatively, a members voluntary liquidation (MVL) is a voluntary procedure to close solvent businesses which do not have any outstanding debts, in cases where the director may be planning to retire, or the company is no longer required to trade. Using members voluntary liquidation can be an effective method of liquidating assets with tax benefits from Business Asset Disposal Relief (BADR).
What does it mean to liquidate assets?
Firstly, an insolvency practitioner is appointed to liquidate the company, and then oversees the sale of company assets. At Eddisons auctions, we work on behalf of licensed insolvency practitioners to organise liquidation sales and facilitate the process on behalf of companies closing down.
Hard assets, which can include plant and machinery equipment, typically have a high value in sales and are therefore prioritised in the process of liquidation sales. A large variety of assets can be sold during liquidation auctions, however, including IT and office equipment, through to specialist tools and manufacturing equipment.
How are assets valued during liquidation?
An independent valuation is provided to determine the assets’ sale price. This is an important stage of the process, as it must be demonstrated that the insolvency practitioner raised the most potential funds to repay creditors and achieve the best outcomes from the sale.
How is payment made to creditors?
During insolvent liquidation, funds raised from liquidated assets are used to repay creditors according to the statutory hierarchy. This requires the assets to be sold with the intention of achieving the best return for creditors. In solvent liquidation, the funds will be distributed evenly across company shareholders.
Liquidation auctions online
We provide transparency across all our liquidation auctions, trusted by insolvency practitioners. Using marketing efforts we can ensure the best possible price is obtained at sale. Any parties can bid during the auctions providing there is no conflict of interest. Our professional auctioneers are registered with RICSand have decades of experience overseeing online asset auctions for a variety of purposes. View our upcoming asset auctions here, or get in touch with our team using the below form for assistance.
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