Consider going into voluntary contribution when you feel the company can no longer continue or:
- You are at stage where you are about to be forced into compulsory liquidation by creditors
- You’ve recognised that the company is insolvent and no longer able to run
- If an insolvent company’s shareholders resolve to liquidate the company and appoint a liquidator.
Benefits:
- By choosing to go into voluntary liquidation you will have a higher level of control (e.g. over timings)
- You may be able to find your own insolvency practitioner
- You can also avoid being petitioned through the courts and show to the public that liquidation was a choice, not a forced action by a creditor
- You no longer need to communicate with the creditors; this is the liquidator’s job
- You can know what to expect throughout the liquidation process
Drawbacks:
- It will be a public process
- Highly unlikely that there will be any returns for company’s shareholders from the liquidation and proceeds may just go towards repaying creditors
- Liquidator needs investigate the conduct of the directors leading up to the insolvency stage.