A general meeting with the company shareholders is necessary according to the Companies Act 2006 to pass a special resolution for winding up the business. Board of directors initiate the meeting and formally appoint a licensed Insolvency Expert to help with organizing the meeting with creditors and shareholders. Maximum two weeks period is allowed after appointing the insolvency practitioner. This offers enough time for serving the notices to the creditors.
After issuing notice on the shareholders and creditors regarding the upcoming meeting, the company is not still in voluntary liquidation. The directors are still office holders and they are responsible to act in creditor’s interest. The directors have to help the insolvency practitioner in giving them access to the accounting records. It will help the liquidator to prepare a statement and report needed to present at the creditors gathering.
The company may have multiple fixed assets then the liquidator team will provide a detailed valuation report of its forced sale. Even the company’s employees will submit their RP1 forms associated with wages, redundancy pay, holiday recompense, and reimbursement in lieu of the notice. The form is submitted to the Redundancy Pay Office.
Statement of Affairs is a report [includes assets and liabilities summary] gets signed by the directors before the shareholders meeting. The report is got by the liquidator from accounting records and company assets valuation reports. A company director gets nominated as chairperson to the shareholder’s meeting.
The presentation of the statement of the affair report will be done by the chairman. The shareholders will participate in the meeting or send a proxy form indicating their rejection or approval of the windup resolution proposal. For the approval of the windup resolution, 75% of shareholders need to agree. A shareholder’s liquidator gets appointed.
Half an hour after the shareholder’s meeting, the creditor’s meeting gets conducted. A nominated chairperson and insolvency practitioner will handle the meeting formalities. The report prepared by an insolvency expert revealing the company’s financial status will be presented. The report contains the last 3 financial year’s extracts, trading history, and Statement of Affairs document along with creditors’ and deficiency account list.
Creditors are offered a chance to ask the directors questions regarding the company’s trading activities and express concerns associated with specific areas. Besides, the creditors can request the liquidator to investigate the concerned areas. The creditors voting needs 50% votes in favor. Creditors who are unable to attend the meeting will send a proxy form including their voting intention.
In conclusion, the resolutions proposal includes approving and appointing a company liquidator. Creditors may propose an alternative liquidator.
Liquidator handles the appointment formalities like place ads and notifies Companies House. Liquidators may need to handle the following –
- Formal company assets disposal.
- Investigate records & books to submit a report within 3 months.
- Instruct recovery agents to check other assets.
- Deal with employees’ redundancy payment needs.
- If funds are available, it will be distributed among the creditors.
The liquidation process takes a minimum of 6 months to a couple of years depending on the case complexity.
Realizing all assets and distributing rests among creditors, the liquidator will formally conduct a meeting with creditors and shareholders to get released as company liquidators. Within three months after this meeting, the company gets finally removed from the Companies House register.