Many directors worry about the cost of liquidation when their company has no assets to sell. However, regulated insolvency solutions are available to help you close your business legally, even when there are no assets to cover the costs.
No Asset Liquidation is a structured process that allows company directors to close an insolvent company without available funds or assets. It makes sure that directors meet their legal obligations while protecting creditors’ interests and providing a way forward.
What to do if you can’t afford to liquidate a company
The good news is that solutions exist even when there’s no money left. If you have no business funds to pay for liquidation, to keep your costs as low as possible, we can carry out a No Asset Liquidation on a fixed-fee. We’ll confirm this fee after we’ve spoken to you to get a better understanding of your situation.
It’s important to note that, if you don’t take action, your creditors might. If they’re unsuccessful chasing you for payment, they can apply to the courts to force your company into liquidation—known as Compulsory Liquidation. This is a more disruptive and stressful process.
If you’re struggling to take control of your debts, speak to our experts to explore a proactive approach to dealing with your company’s insolvency.
Signs that No Asset Liquidation is necessary
If you’re seeing these common signs of insolvency, or approaching insolvency, it’s a sign to seek professional help:
- Growing debts with no means to repay them
- Creditor pressure or legal action threats
- Inability to pay wages, tax bills, or supplier invoices
- No valuable assets to sell to cover outstanding liabilities
If you’re experiencing any of these issues, it’s essential to take advice as early as possible. The sooner you act, the more control you have over the outcome.
What happens in No Asset Liquidation?
No Asset Liquidation follows a similar structured process to other forms of company liquidation, such as Creditors’ Voluntary Liquidation [link to page]. Here’s how the process works:
Step 1 // Confirming insolvency
A company is classed as insolvent if it cannot pay its debts in full, when they fall due. If your company is unable to meet its financial obligations and has no realistic prospect of recovery, liquidation could bring relief from the burden of debt.
Step 2 // Appointing an insolvency practitioner
A licensed insolvency practitioner must be appointed to manage the liquidation, even if the company has no assets. They’ll ensure all legal requirements are met and guide you through the process.
Step 3 // Notifying creditors and HMRC
All creditors, including HMRC, must be formally notified of the liquidation. They’ll be given an opportunity to submit claims for any outstanding debts.
Step 4 // Closing the company
Since there are no assets to sell, the process primarily involves dealing with creditor claims and formally dissolving the company. Once the process is complete, the company is removed from Companies House and ceases to exist.
If you’re unsure if liquidation is the right step, we can give you a free, confidential assessment of your situation. Speak with our team today for professional advice tailored to your situation.
What happens to creditors in No Asset Liquidation?
Creditors will be informed about the liquidation and given the opportunity to submit claims for what they’re owed. However, if you have no assets available, there are usually few or no funds to distribute.
The benefit of liquidation is that it formally closes your company and prevents further enforcement action being taken against it.
It also gives any entitled employees the opportunity to apply to the Government for wages and redundancy pay.
Director responsibilities in No Asset Liquidation
When you enter insolvent liquidation with no assets, all your company’s directors have specific legal duties they must follow, including:
Ceasing trade immediately – Continuing to trade when insolvent can lead to personal liability.
Acting in creditors’ best interests – Directors must not prioritise personal interests over creditors.
Providing company records – Directors must fully cooperate with the insolvency practitioner and provide all required financial records.
Failing to meet these responsibilities can result in serious consequences, including potential investigations into wrongful trading. That’s why it’s essential to get professional advice before you make any decisions.
What happens after No Asset Liquidation?
Once the liquidation is complete, the company is legally dissolved and all remaining liabilities are written off. This allows the directors to move on and have a fresh start. Many directors go on to start new businesses after liquidation.
Can you be personally liable for company debts?
In most cases, directors are not personally responsible for company debts because they’re protected by the limited liability structure of your company. However, personal liability may arise if:
- You took out company loans that are personally guaranteed
- You continued trading while knowing the company was insolvent
- You used company funds improperly before liquidation
If you’re unsure about your personal liability, speak to an insolvency expert for clarity on your situation.
Take control of your situation today
We understand that dealing with insolvency is stressful, especially when your company has no assets to cover the cost of liquidation. But you don’t have to navigate this alone.
Our expert team can assess your situation and help you find the best way forward. Whether you need help with liquidation costs, director redundancy or understanding your responsibilities, we provide clear, honest advice. Contact us today for a free, no-obligation consultation.
