How to close a company with no money
Author
Shaun Barton | Company Closure Expert
Last Updated:
How to close a company with no money
If you want to close your company but there’s no money you do have a couple of options available, depending on the business’s financial situation – whether it’s carrying debt and if it owns any assets.
When there are no debts you can use a process called voluntary dissolution. If your business owes money but has assets that can be sold, you can follow a formal procedure called Creditors’ Voluntary Liquidation (CVL).
So let’s look at these two options in more detail.
Voluntary dissolution for closing a company with no money
This is also known as voluntary strike-off as it results in the company name being removed from the register at Companies House. It’s an inexpensive way to close your company if there’s no money left, costing only £10, but you must be sure that the business is solvent.
You can’t trade for three months before you make your application, or change the company name. During this time you’ll need to wind down your business affairs. This includes closing down the payroll, finalising and submitting statutory returns and company accounts, and bringing all tax payments up-to-date.
How does voluntary strike off work?
Any assets must be distributed amongst the shareholders, as if they’re still in company ownership at the time of dissolution they become the property of the Crown. Here’s a brief timeline of a company strike-off:
- Wind down your business affairs
- Submit an application to Companies House using form DS01
- Within seven days, send a copy of the application to all shareholders, creditors, employees, HMRC, and any directors who haven’t signed the application form
- Companies House will advertise the proposed dissolution in your local Gazette to enable creditors to object if required
After a minimum of three months, the company will be dissolved if there are no objections, and a further notice to that effect is placed in the Gazette
What is Creditors’ Voluntary Liquidation?
Creditors’ Voluntary Liquidation enables you to close down an insolvent company if it has no money but owns assets that can be sold at auction. It’s a formal procedure that must be conducted by a licensed insolvency practitioner (IP).
The cost of this process can be covered by the sale of assets. A further benefit is the fact that you may be eligible for director redundancy using CVL, which could also be used to pay for the procedure.
How does CVL work?
Once you’ve decided to enter CVL, a notice is sent to all shareholders and creditors. The liquidation process involves valuing and selling your company’s assets at auction to release funds for creditors.
Once the liquidation is complete the company name is removed from the register and the business is permanently closed. An investigation also takes place to ensure that no misconduct led to the company’s decline.
As you’ve protected your creditors’ interests by voluntarily placing the company into liquidation and seeking professional assistance, however, the likelihood of misconduct allegations is minimised.
Company Closure can provide further advice on how to close your company if it has no money. We offer free consultations and can quickly guide you to the most appropriate process.
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