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How Long Does It Take to Liquidate a Company?

Posted on by Erwan

If you’ve found yourself in the dreaded position of captaining a company facing insolvency, you might be considering liquidation. There are a lot of legal issues and red tape surrounding liquidation, which might leave you wondering how long it will take.

One good thing is that it’s not uncommon for business owners to have to liquidate a company. The pandemic crushed businesses across the globe, forcing unprecedented liquidation efforts involving hundreds of millions of dollars.

Remember that you’re not alone and that the procedure is standard practice. Let’s look together at how long the liquidation process will take.

Does the Type of Liquidation Matter?

The type of liquidation is the most influential factor in the length of the liquidation process. Voluntary liquidations have the luxury of being structured under a CVL agreement, which is faster. What does this mean, though?

A CVL agreement is when all of the company directors agree to liquidate. There are two ways the process can unfold, both of which are quick.

The other possibility is an involuntary agreement, which takes substantially longer in the beginning phase. We will go into the details of each so you can get a better understanding of your situation.

Voluntarily Liquidate a Company

After deciding to liquidate a business and all the shareholders gather, there is only one more issue. That issue is the permission of the shareholders, of which 75% of them must agree.

It might sound like an issue that could take a long time to resolve, but it’s the quickest part of the proceedings. After around seven days, the liquidation process will begin moving forward.

The actual liquidation itself can take around 1-2 years, however. We recommend you appoint a liquidator to avoid hassle during the complicated legal issues with debtors. You can check out companydoctor.co.uk if you need help in this regard.

Involuntary Liquidation

It will take around three months for the liquidation to move out of the first phase of compulsory liquidation. While this is longer than a voluntary liquidation, the plus side is that it should only take a year for the liquidation to complete.

As is the situation in any liquidation case, some factors can prolong the process. You could be looking at a full two years for either scenario.

Getting Back on Your Feet

Depending on the severity of the losses you take when you liquidate a company, getting back on your feet can seem like a near-impossible task. Sometimes it doesn’t matter how much we plan or work hard. We just get dealt a bad hand.

Once the liquidation process is complete, the important thing is to get back on your feet. Even the worst of times brings valuable lessons, and with those, you’ll be ready to start again if you so choose.

You’ve also got the bonus of having our blog to help. There are regular articles covered on the topics of business and finance, which might help inform your next venture. Whether it’s for business or pleasure, keep reading!

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  • Erwan

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The Economy Guy

Hey, welcome to Economy Dumpster. Where I'll be dumping a lot of things that I have passion about: business, money stuff, and real estate. 

Know more about me here.

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