Winding Up of a Small Business

Winding Up of a Small Business

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The term business winding up is one which encompasses both a creditors voluntary liquidation and also a compulsory winding up. If you are considering a winding up you should read this article and take professional advice.

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Winding Up of a Small Business

The term business winding up is one which encompasses both a creditors voluntary liquidation and also a compulsory winding up. The creditors voluntary liquidation is by far the most used corporate insolvency procedure. It is initiated by the directors, who advise the shareholders (in a small company) usually the same people, that the company is insolvent and that there is no chance of saving the company and that it needs to be closed down.

The creditors at a meeting are advised of the financial state of the company and asked to vote to place it into liquidation. The creditors are allowed to question the directors at the meeting as to the reasons for failure of the business. Sometimes this can be distressing for a director especially when the creditors are persistent in their questioning, but more often than not, creditors do not even attend in person at the meeting and instead vote by proxy to liquidate the company. A Professional should advise directors who seek their advice to take steps to wind up their own businesses, rather than sit and wait for a creditor to do it as it shows the liquidator that one is complying with the obligations of a director.

A compulsory liquidation is begun by petition by a creditor who is owned more than

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