What happens to business bank account during liquidation

bshelley

Hi,
What happens to a ltd company bank a/c during the liquidation process, ie. is the account immediately frozen upon going into liquidation or does this only occur after liquidation has closed? For instance would a client lodgement for such a company still go through successfully or be returned?

Many thanks,
bshelley

Thrugelmir

Liquidator applies for the bank accounts to be frozen as soon as appointed. This doesn't stop monies owed from debtors being received.

jonesMUFCforever

.......but stops the directors misappropriation funds to'favoured' creditors.

bshelley

So effectively the back account would stay active as before but only for incoming funds?

jonesMUFCforever

IMO no - the account would be frozen - the administrators would open a new account for receipt of any monies due to the company and any agreed outgoings.

bshelley

Thanks everyone, from what I've read online it increasingly does look like lodgements are still processed as normal with the original account details, though can't find anything definitive.

jonesMUFCforever

bshelley wrote: »

Thanks everyone, from what I've read online it increasingly does look like lodgements are still processed as normal with the original account details, though can't find anything definitive.

They will go into a suspense account at the bank and following the administrators instructions paid into a new account.
Imagine a bank account is overdrawn say £10k when the company goes into administration then all of a sudden £8k comes in from creditors and the bank says thank you very much we know only lose £2k not £10k
The administrators would not let this happen which is why I mentioned 'favoured' creditors in my original post and why all funds would have to come under the authority of the administrators and not the bank.

redmalc

Actually the account is normally closed prior to the Liquidator being appointed.
When the company consults the Insolvency Prationer and agrees to go into Liquidation the bank is written to immediately and the account is Frozen but will still accept deposits