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Should My Company Enter into Company Liquidation or Voluntary Administration?

Should My Company Enter into Company Liquidation or Voluntary Administration?

If you are struggling with company debts, you may be considering two business debt solutions: Company Liquidation and Voluntary Administration.

Both options are available to companies which are insolvent or likely to become insolvent. While both are designed to offer financial aid to companies in financial distress, there are key differences between the two.

A Company Liquidation is when a company’s affairs are wound up and operations are completely shut down and the company is de-registered. Following a liquidation, the company no longer exists.

On the other hand, a Voluntary Administration is a period that usually lasts for approximately 30 days. It is an interim process in which the appointed Administrator takes control over the company while a decision is made to either shut down the company, enter into a Deed of Company Arrangement, or return control of the company to the director. If the business is viable, it gives the company a chance to restructure its financial affairs so that it can continue trading.

So which solution is best for me?

You should choose Company Liquidation if…

There is no chance of revival and your company has reached the point of no return. The main focus when it comes to liquidating a company becomes repaying creditors as much of the debt as possible as opposed to trying to keep the company open and operating successfully.

You should choose Voluntary Administration if…

Your company has a chance of survival. This is when there is hope that the company can turn around, fix its financial structure so that it can continue trading while ensuring that debts are repaid as much as possible.

If you believe restructuring is worthwhile, then this is the best option for you.

However, it is important to bear in mind that not all Administrations are successful. If the Administrator and the creditors believe that the company cannot be saved, then they may still vote to liquidate the company. Though, as opposed to just entering into company liquidation immediately, this does give you a chance to survive.

If you would like to learn more about Company Liquidation and Voluntary Administration, then please contact ISA. ISA will assess your financial situation and make recommendations based on expert knowledge and experience to identify the business debt solution that best suits you. Our 24/7, toll-free hotline is 1800 003 883.

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