How Long Does It Take To Liquidate A Company?
The time it takes to liquidate a company depends on the type of liquidation involved and a wide range of practical, financial and legal factors affecting how quickly the company can be wound up.
Overview: How long does liquidation take?
- Creditors’ Voluntary Liquidation (CVL): It can take from 4 months up to several years before the insolvent company is dissolved, in our experience. CVL research for the Insolvency Service says the minimum duration is 122 days (4 months) and the median is 712 days (nearly 2 years).
- Compulsory liquidation: The process usually takes much longer than a CVL, at least 1-2 years but often 3 years or longer for complex cases. It is usually the least favourable process and best avoided where possible.
- Members’ Voluntary Liquidation (MVL): We can usually distribute the solvent company’s property and assets within 6 months. The company needs to have enough assets to settle all its liabilities and interest in full within 1 year.
#1 Creditors’ Voluntary Liquidation (CVL): How long does it take?
Placing an insolvent company into a CVL can take as little as 3-4 weeks, depending on the cooperation of directors (such as by providing requested information promptly). Then the CVL itself (which involves ceasing trading and selling off company assets) can last as short as 4 months or up to several years, before the company is dissolved.
Naturally, the duration of the CVL depends on the complexity of the situation. For more details on our experience of how long a CVL lasts, read 1.1. Creditors’ Voluntary Liquidation (“CVL”) in our guide to the different types of liquidation.
A recent 2024 government CVL research report for the Insolvency Service has similar findings. It describes the minimum length of time for a CVL as 122 days, i.e. 4 months, in Figure 1 CVL length in days.
It also says the median length of time taken to complete a CVL is 712 days i.e. almost 2 years. Lengthy asset investigations, sale of a property, debt settlement over a prolonged period, or ongoing legal proceedings are potential reasons for a CVL taking many months or several years.
However, the report also notes that the end date of a CVL is when a company was dissolved. But the actual liquidation would come to an end at least 3 months earlier, when the liquidator submits a final report.
Therefore, the report points out Limitation 1 in the analysis. If the median duration of a CVL is 712 days and you deduct 92 days i.e. 3 months to reflect when the actual liquidation ended, the median length is 620 days i.e. 1.7 years.
See our Creditors’ Voluntary Liquidation (CVL) page for more details.
CVL duration: Other timings to consider
The notice period shareholders typically receive for placing a company into a CVL is 14 days for a private company or 21 days for public companies. But if 90% of shareholders agree, you can bring the date forward to as soon as possible.
Creditors must receive enough notice of the proposal when considering placing a company into a CVL.
They usually need 9 calendar days but in all cases, creditors should be entitled to 7 clear days plus time for notice delivery. At the very least, under Insolvency (England and Wales) Rules 2016, creditors must normally receive at least 3 business days’ notice of the decision date for nominating the liquidator.
See our article on the process of placing a company into liquidation for further information.
#2 Members’ Voluntary Liquidation (MVL): How long does it take?
MVLs, for solvent companies whose directors want to wind down their activities, are usually much quicker and straightforward processes. The company must hold enough assets to settle all liabilities and interest in full within 12 months.
In our experience, we can assist directors to place the company into an MVL within 7 days, if all directors are in agreement. Then we distribute cash to shareholders within 7 days of the receipt of cash from the bank, with company property and assets usually distributed within 6 months.
Liquidators also need to reclaim VAT and obtain tax clearance from HMRC, potentially extending timings slightly, but usually the process runs smoothly.
See our Members’ Voluntary Liquidation page for more details.
MVL duration: Other timings to consider
A declaration of solvency states that directors believe their business can pay back all its debts and interest within a year. It must be signed within 5 weeks before the date of liquidation.
The signed declaration of solvency and special resolution must be sent to Companies House within 15 days of the resolution being passed.
If company debts are still outstanding by the end of the 12 month period, directors must give evidence proving they had valid reasons for believing their company could pay its debts back.
Summary so far: How long does voluntary liquidation take?
Creditors’ Voluntary Liquidation (CVL) duration
- It can last from 4 months up to several years before the company is dissolved in our experience.
- CVL research for the Insolvency Service says the minimum duration is 122 days i.e. 4 months and the median length of time is 712 days i.e. almost 2 years.
Members’ Voluntary Liquidation (MVL) duration
- We can usually distribute company property and assets within 6 months.
- The company must hold enough assets to settle all its liabilities and interest in full within 12 months.
#3 Compulsory Liquidation: How long does it take?
A compulsory liquidation is the result of a creditor issuing a winding-up petition, so it involves more hassle and stress for directors, typically lasting much longer than a CVL does. While of course it varies on a case-by-case basis, it usually takes at least 1-2 years to fully complete, but often 3 years or longer for complex cases.
The compulsory liquidation process involves a mandatory, rigorous investigation by the official receiver into the directors’ conduct to uncover any potential fraud or wrongful trading.
A court orders the process to resolve the complex creditor disputes and distributing the assets requires strict judicial oversight plus many administrative steps.
A compulsory liquidation is usually the least favourable outcome and best avoided, compared to a CVL which provides more control over the process.
Conclusion: How long does it take to liquidate a company? (UK)
How long a liquidation takes will depend on a wide range of factors, including the company’s assets and liabilities, the complexity of its accounts, how quickly directors provide information and whether there are disputes with creditors.
More complicated cases such as those involving property sales, legal claims, investigations into director conduct or protracted asset realisations, can take much longer than more straightforward liquidations.
For an insolvent company, aside from a CVL or administration, a Company Voluntary Arrangement (CVA) is another potential business recovery option, depending on its financial situation. In a CVA, the insolvency practitioner creates a formal repayment plan while the company continues trading, easing the pressure from creditors.
If you found this article helpful, take a look at some of our most popular articles, including:
- Is There A Penalty For Not Issuing Payslips?
- Putting Personal Money Into A Limited Company: What You Should Know
- Active Proposal To Strike Off: What Happens If The Action Is Suspended?
- How Long Should You Keep Company Records After Liquidation?
Whether your company needs a business recovery expert or some financial advice, we are here to help. For more information, please don’t hesitate to contact Hudson Weir.
