DIRECTOR CONDUCT AFTER WINDING UP: Appointing the liquidator affects director conduct. Following liquidation, company directors:
- Lose control of the company and anything the business owns.
- Cannot act for the company or on behalf of the business.
During company liquidation ‘winding up’ the director must:
- Provide all information about the company that the liquidator asks for.
- Hand over company records, paperwork, and any assets.
- Attend an interview conducted by the liquidator (where required).
Note: In some cases, the liquidator may decide your conduct was unfit. If so, company director disqualification can result in a ban for 2 to 15 years or a prosecution.
Reuse Company Name after Liquidation
Note: There are strict rules about re-using company names after it has been liquidated.
The director of a company in compulsory liquidation or creditors’ voluntary liquidation gets banned for 5 years from forming, managing or promoting any business with the same or similar name to the liquidated company.
The ban also applies to the company registered name and any trading names (if relevant). Some exceptions apply such as where:
- A business gets sold by a licensed insolvency practitioner giving the legally required notice.
- A court gives you permission to reuse the company name.
- You have involvement with another company that has been using the same name as the wound up company for at least one year. Read more on reusing the company name after insolvent liquidation.
Accessing a Frozen Company Bank Account
If someone files a petition to wind up your company the bank account will get frozen. That means you would need a validation order to gain access to the account.
Applying for a Validation Order
The person who files a winding-up petition is the ‘respondent’. You must inform the respondent any time you apply for a validation order. You must also inform them which court you apply to and the date you will apply.
In most cases you will be applying for a validation order at the Companies Court. Download ‘Form IAA insolvency act notice‘. Fill in form 1AA and send it with a witness statement to the court. There will be court administration fees to pay.
After You Apply for a Validation Order
As a rule, the hearing takes place on the same day or within a few days’ of the application. The hearing is your opportunity to present your case. In most cases it will be to a registrar or a district judge.
The respondent also has an opportunity to present their case. It allows them to make an objection if they do not agree to you getting a validation order. After the completion of the hearing, you will either:
- Receive a decision straight away (the court also sends a written copy to you by mail).
- Requested to attend another hearing (if the court wants more information or evidence).
If you are successful the court will supply you with the validation order. You must then provide a copy of the order to your bank to gain access your company bank account.
Note: What if you disagree with the decision at the court hearing? In some cases you can make an appeal to the Chancery Division of the High Court.
ALSO IN THIS SECTION
How to Liquidate a Company: The key aspects to consider when liquidating your limited company.
Compulsory Liquidation: How company directors can apply to the court for a winding up order.
Creditors’ Voluntary Liquidation: CVL involves creditors because the company cannot pay its debts.
Members’ Voluntary Liquidation: MVL is the members’ agreement to liquidate a solvent company.
What Does a Liquidator Do? A liquidator is the official receiver who conducts the liquidation process.