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Insolvency

Voluntary liquidation

Liquidation is the formal process of ending the life of a company. Unlike
partnerships, the business continues to exist when trade is ceased and will remain in
existence until the process of liquidation is completed.

Liquidation can be described as:

 Voluntary

 Compulsory (see below)

A voluntary liquidation occurs where the members pass a resolution to
go into liquidation.

The type of resolution needed depends on the circumstances:

 Where the period fixed for the duration of the company expires or
an event occurs upon which the articles provide that a company
should be wound up, an ordinary resolution must be passed.

 A special resolution must be passed if the company is being
wound up for any other reason.

Once the resolution has been passed, notice of the liquidation should be posted in
the London Gazette within 14 days.

There are two types of voluntary liquidation:

 A members’ voluntary liquidation is used where the company is
solvent.

 A creditors’ voluntary liquidation is used where the company is
insolvent.

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