What a Liquidator Does When You Close a Company

Here is what that person actually does, and where closures get stuck.

The core job

A liquidator takes an orderly approach to ending the company. Establish what it owns, establish what it owes, settle the second from the first, and distribute anything left to the shareholders.

Then report that this was done properly.

The report is what the authority wants. Everything else is the work behind it.

The sequence

1. Appointment by shareholder resolution.
2. Notice to creditors, giving them a period to submit claims.
3. Identify and realise the assets. Collect receivables, sell what can be sold, close bank accounts.
4. Establish the liabilities, including the ones nobody mentioned.
5. Settle in order of priority. Employees, then authorities, then other creditors.
6. Distribute any surplus to shareholders.
7. Issue the liquidator's report.

The obligations that get forgotten

These are what turn a two-month closure into a six-month one.

End of service for every employee, calculated properly and paid. Visa cancellations, which have their own sequence and cannot be rushed. Final VAT return and VAT deregistration.
Corporate Tax position for the final period, and deregistration. Any lease with a remaining term, and the exit terms in it.
Bank accounts closed rather than left dormant.

The tax deregistrations catch people repeatedly. A company that has stopped trading is still registered until it deregisters, and obligations continue while it is.

Where closures actually get stuck

Records that no longer exist. You cannot establish what a company owes from incomplete books, and reconstruction at this stage is expensive.

Unreconciled bank accounts, so nobody can prove the closing position.

A director's account with a debit balance nobody wants to discuss. That is money owed to the company by a shareholder, and it does not disappear because the company is closing.

Related party balances with no agreement behind them.

Creditors who surface after the notice period because they were never on the ledger.

Solvent and insolvent

If the company can pay everyone, this is an administrative process and the shareholders receive what remains.

If it cannot, the position changes materially and directors' conduct comes into question. Take legal advice early rather than proceeding and hoping.

Do not distribute anything to shareholders before creditors are settled. That is the error with the most serious consequences in the whole process.

What to do before you appoint anyone

Reconcile the banks. Produce a current trial balance. List every employee with their end of service entitlement. List every registration the company holds, tax and otherwise.

A liquidator given those four moves quickly. One given a box of papers does not.

Where we fit

We act as liquidator and prepare liquidators' reports for UAE company closures. Send your trial balance, licence and employee list for a scope and fee.