When a company goes into liquidation, the liquidator arranges for any assets the company holds to be sold at auction. The money generated from this sale is used to repay creditors, but because of the company’s poor financial position it’s rare for all creditors to receive repayment.
A payment hierarchy exists for the creditors of a liquidated business in the UK - secured creditors are at the top and unsecured creditors at the bottom. You may or may not be aware of the company’s serious financial position, but once it enters liquidation it will ultimately close down permanently.
So what should you do if a company has gone into liquidation and owes you money?
Worried about your Bounce Back Loan?
If you are a limited company director worried about how you are going to repay your Bounce Back Loan, we are here to help. As licensed insolvency practitioners we can talk you through your options when it comes to repaying your outstanding Bounce Back Loan, as well as handling all negotiations with creditors on your behalf. Call our team today on 0800 063 9262 .
Make a claim to the liquidator
When a liquidator is appointed they take over control of the company from directors, and invite all creditors to make a claim. A public notice is also placed in the Gazette advertising the fact that the company is to be liquidated.
So if a company owes you money and they have entered liquidation you’ll need to file a claim with the liquidator, stating the amount you’re owed, whether you provided goods or services, and also supporting documentation.
As we mentioned earlier, there’s a specific hierarchy of creditor groups so the group you’re in determines your likelihood of being paid.
Start your online liquidation today
If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.
Creditor groups for repayment following liquidation
The costs of the liquidation are paid first out of the proceeds of asset sale, followed by:
- Secured creditors with a fixed charge, typically including banks and other larger financial institutions. This group of creditors are able to sell the asset over which they hold the fixed charge.
- Preferential creditors – these include the company’s employees for payments of wage arrears, and HMRC for some tax arrears
- Secured creditors with a floating charge - a floating charge is a charge held over an asset class, such as stock or vehicles, rather than a single asset. A sum is also set aside for unsecured creditors from the allocation for floating charge holders – this amount called the ‘prescribed part’
- Unsecured creditors - including suppliers, customers, contractors, some HMRC debts, and some employee claims
- Associated unsecured creditors – if you’re personally connected to the company in some way and have loaned money to the business, you’re placed below unsecured creditors that aren’t connected
Each category of creditor must be repaid in full before the liquidator can move on to the next group, unfortunately leaving unsecured creditors at serious risk of receiving no dividend at all from the liquidation process.
If you would like more information on what to do if a liquidated company owes you money, UK Liquidators can help. We're liquidation specialists and will provide the trustworthy unbiased advice you need. Please call one of the team to arrange a free same-day consultation – we work from a wide network of offices throughout the UK.
