How much does it cost to liquidate a company?

A creditors’ voluntary liquidation of a small company typically costs between £4,000 and £8,000 plus VAT. The company’s assets pay for it where they exist; where they do not, the directors do.

What the fee covers

A liquidator’s fee pays for the work from the first meeting to the company’s dissolution: preparing the statement of affairs and the directors’ report, convening the shareholders’ and creditors’ decisions, taking control of assets and selling them, dealing with employees’ claims through the Redundancy Payments Service, agreeing creditors’ claims, investigating the directors’ conduct and reporting to the Insolvency Service, filing the statutory returns, distributing whatever is left and closing the case.

That work does not shrink much for a small company. The statutory steps are the same whether the company owed £30,000 or £3 million, which is why the floor is where it is.

What drives the price up

• Assets to sell. Stock, vehicles, equipment and debtors all have to be valued, secured and realised. An agent’s fees come on top.
• Employees. Each one generates redundancy, notice and holiday claims that the liquidator processes. Ten employees add real work.
• Number of creditors. More claims to agree, more correspondence, more chance of a dispute.
• A property lease. Surrender or disclaimer, dilapidations, and a landlord who wants to argue.
• Anything contentious. An overdrawn directors’ loan, dividends that need testing against reserves, a Bounce Back Loan with questions over it, or transactions before the liquidation that have to be examined.
• Disbursements. Statutory advertising in the Gazette, the bond the liquidator must take out, postage, and legal fees where needed. Usually £500 to £1,500 on top of the fee.

A company with a few creditors, no employees, no assets and clean books sits at the bottom of the range. A company with staff, a lease and a loan account to argue about sits at the top or above it.

Who pays

The company’s assets, first. The liquidator’s fees and expenses rank ahead of unsecured creditors. If the company has £20,000 of recoverable assets and the fee is £6,000, the liquidation funds itself and £14,000 goes towards creditors.

The directors, if there is nothing. A company that has run out of cash and has no assets cannot pay for its own liquidation, and practitioners do not work for free. The directors fund it personally, sometimes with a contribution from a shareholder or family member. This is the position for a large share of small-company CVLs.

Sometimes, a creditor. Where a creditor stands to recover something, they occasionally fund part of the cost. Rare for small companies.

Lower-cost routes

Fixed-fee liquidators. A number of licensed firms offer CVLs from around £2,000 to £3,000 plus VAT for companies with no assets and a short creditor list. Check the licence on the Insolvency Service’s register, ask what the fixed fee excludes, and expect a more process-driven service. For a simple case it is a reasonable choice.

Strike-off, only if the company is solvent. If the company can pay every debt in full before applying, a DS01 costs £33 and needs no practitioner. If it cannot, a strike-off is objected to by creditors and leaves you with the same problem later. It is not a cheap liquidation.

Compulsory liquidation by a creditor. Costs you nothing directly because the petitioning creditor pays the court fees and the Official Receiver takes the case. But you lose the choice of practitioner and timing, and the investigation into your conduct is conducted by the state rather than by someone you appointed. Only a sensible route where the company has nothing to protect and no director exposure.

Getting a quote

Any licensed practitioner will give a written quote after a free initial conversation. Ask two. Give each the same information: debts by creditor, assets, employees, the lease, personal guarantees, and the loan account balance. Ask what is included, what is a disbursement, and what would push the fee up. Ask about payment terms if the company has no money.

A quote that is far below the others usually excludes something. A quote that is far above usually reflects a complication the others have not spotted, so ask what it is.

What to do today

1. List the company’s assets, creditors, employees and any lease. The quote depends on these.
2. Work out whether the company can fund the liquidation itself or whether you will.
3. Get two written quotes from licensed practitioners and compare what each includes.
4. Do not file a strike-off to avoid the cost. It does not work with debts outstanding.