Choosing the right Liquidator for you

Once your company is in Liquidation, the Liquidator has almost complete control over what happens.   Any promises and assurance given are now worth nothing.   It is wise to consider your options before you propose a Liquidator to the creditors.

Role of the Liquidator

Understanding the role of Liquidator will help you choose the right one.   The Liquidator is there to do two things:

1. Get as much money in for creditors as possible
2. Establish what went wrong with the company

Many Directors are surprised by the emphasis on creditors’ rights in Voluntary Liquidation, thinking the Liquidator is only there for their needs.

Despite what you may think, Directors don’t appoint the Liquidator, you propose a Liquidator to your creditors. It is the creditors that appoint the Liquidator, as it is their interests being looked after, not yours.

If any Liquidator doesn’t follow the rules that govern the conduct of an Insolvency Practitioner, they run the risk of losing their license.  It this happens, they have no career,  nor do their staff.   The question you need to ask if someone is promising to look the other way over any issues – would you do it, knowing your future career was at stake?

Choosing a Liquidator

Fees

OK, let’s get this one out of the way first.  Costs for Voluntary Liquidation tend to be pretty standard across the market place. Although some Insolvency Firms would rather get you in on a low introductory price, only for you to find that there are a whole lot of additional costs you need to pay before the company can actually be Liquidated, but of course you have already signed on the dotted line before you find that out!

If you have found a Liquidator that agrees to Liquidate your company for a low price – great! Now let’s make sure what’s in the deal.

The fee you have been quoted should be the complete fee for Liquidating the company.  If there is additional work required this should come from any assets within the company.

It should also be for Creditors’ Voluntary Liquidation.  Many companies will advertise they will Liquidate your company for a low cost £2,000.  What they don’t tell you is that it’s Compulsory Liquidation not Voluntary Liquidation which is not the same thing at all (a great deal more stressful to boot).

There are those that will Dissolve your company instead.  If you know you are Dissolving the company, then great, but you should be aware of what service you are paying for.

Voluntary Liquidation is a set process, and has a basic standard of work that’s required.  The minimum cost of this is usually around the £4,500 mark, some firms charge more, but few charge less, whatever they say at the start.

If your company has assets worth more than £4,500 (including debtors) then the cost of Liquidation can be taken from these and shouldn’t be a cost you personally have to pay!

Make sure of the service to expect

Service can also be an issue.  We have heard many times that once the ink has dried on the paperwork you cannot get hold of anyone.   You should either have a case manager appointed, or an administrator, and you should have a direct dial for them.   Before you sign up, give them a ring, see how easy it is to get hold of them.

The myth of the friendly Liquidator.

Much like a used car salesperson, friendly Liquidators lose their smile once appointed.   The fact is any Liquidator can only be as friendly as the law allows, and no Liquidator who wants to stay in practice will go beyond that point.

Of course, there are Liquidators who can be a little more assertive about their role than others.  In our experience, these are usually the ones who promised the world before you sign up.

Pragmatic Liquidators, on the other hand, will discuss any potential problems with you prior to you Liquidating the company.

How does this help?   By pointing out issues it give you a chance to either resolve them, or propose a sensible way they can be dealt with in the Liquidation.   Once you are in Liquidation, this becomes a lot more difficult to discuss as creditors are more involved, who may not be overly happy with what is being discovered.

In order to choose the right Liquidator for your company you should:

• Be realistic about fees, if it sounds to cheap, then something is usually wrong.
• Know what level of service you can expect – what is included in the price.
• Forget about friendly Liquidators. Look for a pragmatic Liquidator who will go through things with you before the Liquidation.