Typically, how much does it cost to liquidate a company? The liquidator will locate and sell these assets to pay their fees and also any outstanding debts with creditors. Directors might also be able to use personal funds to fund the process or even their own redundancy payments.

However, this option is unlikely to be as attractive for creditors and it can also expose directors to potentially significant tax liabilities. It is important that before entering into liquidation, you think carefully about your motivations and consider any alternatives. If you do decide to proceed with the liquidation, it is best that you do so voluntarily rather than waiting to be forced into compulsory liquidation by a creditor.

The Cost of Liquidating a Company

There is no set fee for liquidating a company and the cost will vary depending on the case complexity and how much time the liquidator spends winding up your business. The more complex the case, the higher the cost.

It is the role of the liquidator to locate company assets and arrange for their valuation before realizing these assets for the benefit of creditors. If a Director or connected party sold any company assets shortly before liquidation, the liquidator may consider this to be a Transaction at Undervalue and they will need to investigate and report on this.

Liquidation fees are typically charged either based on time spent or as a percentage of asset realizations. The insolvency practitioner will provide a report to creditors outlining their hourly rates and the estimated total cost. If the fee is a percentage of asset realizations, this will require a creditors’ agreement.