1. Board Decision

Directors must formally acknowledge that the company is insolvent and unable to meet its financial obligations. They pass a resolution to initiate voluntary liquidation, prioritizing the interests of creditors over shareholders. This decision marks a shift from trading to closure, with directors taking proactive steps to manage liabilities responsibly.

2. Appoint an Insolvency Practitioner

A licensed insolvency practitioner (IP) is engaged to oversee the liquidation process and ensure compliance with legal requirements. The IP prepares essential documentation, including the statement of affairs and notices for meetings. Their appointment signals the start of formal proceedings and provides professional guidance throughout.

3. Shareholders’ Meeting

A general meeting of shareholders is convened to vote on the resolution to wind up the company voluntarily. At least 75% of shareholders (by share value) must approve the motion for it to pass. This step confirms shareholder consent and enables the transition to liquidation under creditor control.

4. Creditors’ Meeting

Creditors are invited to a decision-making meeting, typically held virtually, to confirm the appointment of the insolvency practitioner. They may also form a liquidation committee to oversee the process and protect their interests. This meeting ensures transparency and gives creditors a voice in the administration.

5. Transfer of Control

Once liquidation begins, directors lose control of the company’s affairs, and the IP assumes full responsibility. The IP takes custody of assets, books, and records, and begins investigations into the company’s conduct. Directors must cooperate fully, providing access and assistance as required by law.

6. Asset Realisation

The IP identifies and sells company assets to generate funds for creditor repayment. Secured creditors are paid first, followed by preferential and unsecured creditors according to statutory order. This process aims to maximise returns while ensuring fair and lawful distribution.

7. Investigation and Closure

The IP conducts a review of directors’ actions leading up to insolvency, reporting any misconduct to the Insolvency Service. Once investigations and distributions are complete, the company is formally dissolved at Companies House. This final step brings legal closure and ends the company’s existence.