A company can reach the point of liquidation with very little cash left but still own valuable assets. Vans, cars, machinery, tools, computers and specialist equipment can all have a resale value, which naturally raises questions for directors about what happens to them when the business closes.
If the company owns those assets, they belong to the company rather than to its directors personally. Once a liquidator is appointed, control of company property passes to them. They will establish what the business owns, assess its value and decide how it should be dealt with for the benefit of creditors.
Company has vehicles or equipment and cannot pay its debts?
Before selling, transferring or keeping company assets, check what can legally be done. Anderson Brookes can review the company’s position and explain how its assets would be dealt with in liquidation.
What Happens to Company-Owned Vehicles and Equipment in Liquidation?
When a company enters company liquidation, the liquidator takes control of assets that belong to the business. These might include:
- cars and commercial vehicles owned outright
- plant and machinery
- construction tools
- computers and other IT equipment
- office furniture
- specialist equipment
- stock and materials
- fixtures owned by the company
Government guidance confirms that the liquidator takes control of the business and sells company assets, using available funds towards the company’s creditors.
This does not mean every asset is treated identically. An old laptop with little resale value needs a different approach from a commercial vehicle worth £20,000 or specialist machinery that could attract buyers within a particular industry. The liquidator therefore needs to establish both who owns each item and what it is realistically worth.
How Are Company Vehicles and Equipment Valued?
The figures shown in your accounts do not necessarily tell the liquidator what an asset can actually be sold for. A vehicle may have depreciated significantly since it was purchased. Machinery that looks heavily written down in the accounts might still have strong second-hand demand. Some specialist equipment may only appeal to a relatively small group of buyers.
Depending on the assets involved, the liquidator may use an independent valuer, auctioneer or another specialist.
Factors affecting value can include:
- age and condition
- mileage or hours of use
- maintenance history
- current second-hand demand
- whether specialist buyers are available
- transport or removal costs
- whether the item is likely to sell better alone or with other business assets
The purpose is to reach a reasonable real-world value rather than simply relying on what the company’s accounting records say. That valuation becomes especially important if a director, shareholder or connected new business wants to buy the asset.
Can a Director Buy Company Vehicles or Equipment From the Liquidator?
Potentially, yes. Liquidation does not automatically mean a director can never keep a company van, tools or equipment they still need. It does mean they cannot simply take them. Once the liquidator controls the assets, a director or connected business may be able to make an offer to purchase them. The transaction needs to achieve an appropriate value for the liquidation estate and be properly documented.
For example, imagine a plumbing company owns a van outright. A professional valuation indicates it is worth around £8,000. The director intends to start another business and would like to continue using it. The van cannot simply be transferred to the new company for nothing. The director may, however, be able to purchase it through the liquidation at a properly supported value. Any money paid belongs to the company and becomes part of the funds available within the insolvency.
This is one reason early discussions with your proposed insolvency practitioner can be helpful. If there are particular vehicles, tools or pieces of equipment you would like to retain, tell them rather than trying to reorganise ownership yourself immediately before liquidation.
Don't move company assets into a new business for free
Vehicles, machinery and equipment owned by your limited company do not become your personal property simply because the business is closing.
Selling or transferring them for substantially less than their value can be investigated after liquidation. Section 238 of the Insolvency Act 1986 allows a liquidator to challenge certain transactions at an undervalue where a company has given assets away or received significantly less than their value.
If you want to keep company equipment or transfer it to another business, take advice and establish a proper value first.
Can You Sell Company Vehicles or Equipment Before Liquidation?
A company does not necessarily have to wait until the liquidator is appointed before selling an asset. However, an insolvent company needs to be especially careful about how sales are handled.
The main questions are likely to include:
- Was the asset sold for a reasonable market value?
- Is there evidence supporting that value?
- Who bought it?
- Was the buyer connected to the director?
- Where did the sale proceeds go?
- Did the transaction reduce the amount available to creditors?
Our guide to pre-selling company assets before liquidation explains this issue in more detail.
Records matter here. A liquidator may later review bank statements to see where asset-sale proceeds were paid and whether transactions can be explained. Our article on what liquidators look for in bank statements covers the types of transactions that can attract questions.
A sale before liquidation may be perfectly legitimate. Problems tend to arise where value has disappeared from the company or an asset has been moved to somebody connected with the directors without a defensible commercial basis.
Thinking about selling or keeping company equipment?
Don’t transfer vehicles, machinery or other company assets without checking the position first. We can explain how assets should be valued and dealt with before a CVL.
What If the Vehicle Is on Hire Purchase or Finance?
A financed vehicle needs to be separated from one the company owns outright. With hire purchase or conditional sale, the finance provider will commonly retain legal ownership until the agreement has been completed. The fact that the company uses the vehicle or is shown as its registered keeper does not necessarily mean it owns it outright.
The insolvency practitioner will usually need to establish:
- the type of finance agreement
- how much remains outstanding
- whether payments are in arrears
- the vehicle’s likely market value
- whether there is any equity in the agreement
Possible outcomes include the vehicle being returned to the lender, sold with the lender’s involvement, or dealt with in another way depending on the agreement and value.
Our dedicated guide to company vehicles on hire purchase covers settlement figures, shortfalls and personal guarantees in more detail.
The important point is that a financed vehicle is not automatically an asset the liquidator can treat in the same way as a van the company bought outright.
What Happens to Leased or Rented Equipment?
The same ownership question applies to equipment. A company may have physical possession of an item without owning it. Common examples include:
- leased photocopiers
- rented plant
- leased commercial vehicles
- rented machinery
- IT equipment supplied under a rental agreement
The liquidator will review the underlying contract and establish the rights of the supplier or finance company.
Equipment belonging to somebody else does not simply become available for sale because it happens to be sitting inside the insolvent company’s premises. This is why finance agreements, lease documentation and purchase invoices should be kept available when preparing for liquidation.
What If You Personally Own Equipment Used by the Company?
Directors sometimes use personally owned assets within their company. You might, for example, own a laptop, tools or even a vehicle personally but allow the limited company to use it for work.
If the asset genuinely belongs to you, it does not automatically become company property when the company enters liquidation. You should, however, be able to explain and evidence that ownership.
Helpful records could include:
- the original purchase invoice
- personal bank statements showing payment
- finance documentation
- insurance records
- agreements between you and the company
- company asset registers
Do not simply remove disputed equipment from company premises without discussing it with the insolvency practitioner. Directors are required to hand over company assets, records and information when a liquidator is appointed, so questions over ownership are better resolved openly.
Can Bailiffs Take Company Vehicles Before Liquidation?
If a creditor has already reached enforcement stage, company-owned vehicles and equipment can potentially be at risk before a CVL formally begins. Planning to place a company into liquidation does not necessarily stop enforcement simply because you have spoken to an insolvency practitioner.
The precise position depends on the creditor, the enforcement stage, who owns the asset and whether any finance is secured against it. If enforcement agents are already involved, tell your proposed insolvency practitioner straight away. Waiting while valuable assets are removed may reduce the options available.
What Happens to Money Raised From Selling Assets?
The proceeds do not go directly to the director. Once an asset belonging to the company is sold, the money forms part of the company’s liquidation estate. It is then dealt with alongside other available funds according to insolvency rules.
That can include:
- paying the costs and expenses of liquidation
- dealing with secured and preferential claims where applicable
- making distributions to creditors according to their legal priority
Our guide to who gets paid first in liquidation explains the creditor hierarchy in more detail.
Asset sales can also have tax consequences. For a VAT-registered company, HMRC’s current guidance makes clear that taxable supplies include sales of assets. VAT registration may therefore need to remain active while the liquidator realises taxable property.
This is why, as explained in our article about your VAT number during liquidation, stopping normal trading and cancelling the VAT registration are not always simultaneous.
What Happens After the Last Date for Proving?
The process does not move directly from the deadline to money appearing in a creditor’s bank account.
Make a list of company assets
Record the vehicles, machinery, plant, tools, computers, stock and other equipment currently used by the business. Include assets even if you think they have little value. Let the insolvency practitioner decide what is relevant.
Confirm who actually owns each item
Separate assets owned outright by the company from leased, rented or financed equipment. Also identify anything you own personally but allow the company to use.
Gather ownership and finance documents
Keep purchase invoices, vehicle records, finance agreements, lease documents, asset registers and insurance information. These records can save considerable uncertainty later.
Don't transfer assets without advice
Avoid giving company assets to yourself, relatives or a connected business because you know liquidation is approaching. If a sale is appropriate, it should have a clear commercial basis and supporting valuation.
Preserve the assets
Continue looking after valuable vehicles and equipment. Do not deliberately dispose of, hide or damage assets simply because the company is insolvent.
Tell the insolvency practitioner what you want to keep
If there are tools, vehicles or pieces of machinery that you would like to buy, raise this early. A proper valuation and transparent purchase can sometimes allow you to retain useful equipment without depriving creditors of its value.
Company has assets but cannot pay its debts?
Vehicles and equipment do not prevent an insolvent business from entering liquidation. Answer a few questions about the company’s debts, assets and trading position and Anderson Brookes can help you understand the available options.
Company Vehicles and Equipment in Liquidation FAQs
Can I keep my company van after liquidation?
Potentially, but you cannot simply take it because you are the director. If the company owns the van, it forms part of the liquidation estate. You may be able to purchase it from the liquidator at an appropriately supported value.
Can I buy my tools and equipment from the liquidator?
Yes, this can be possible. The liquidator will need to consider the value of the assets and ensure that any sale is appropriate for creditors. If you are interested in buying particular equipment, tell the insolvency practitioner early.
What happens to a van on hire purchase?
A hire-purchase vehicle is different from one the company owns outright because the finance provider will commonly retain legal ownership until the agreement is completed. The insolvency practitioner will review the finance balance, market value and agreement before deciding what should happen.
Can I transfer equipment to my new company before liquidation?
You should not simply move company assets into another business. A properly valued and documented sale may be possible, but transactions for significantly less than market value can potentially be challenged after liquidation.
Does the liquidator always sell every company asset?
Not necessarily in exactly the same way. The liquidator’s job is to realise value for creditors. Some assets may be sold individually, through an auction, to a connected buyer at an appropriate value or as part of a wider business and asset sale.
What if a company asset is worth very little?
It still belongs to the company. However, the liquidator will consider whether the cost and effort of collecting and selling an item are proportionate to what it is likely to realise.
Do directors have to hand over company vehicles and equipment?
Yes. Once the liquidator is appointed, directors no longer control company-owned property and must cooperate by handing over assets and providing the information and records requested.
Need Help Understanding the Liquidation Process?
You don’t need to sell every van, machine or computer before asking for insolvency advice. In many cases, trying to reorganise company assets immediately before liquidation can make the situation harder to resolve. Establishing ownership, preserving records and getting realistic valuations gives the insolvency practitioner a much clearer picture.
At Anderson Brookes, we can review the company’s financial position, establish how vehicles and equipment are likely to be treated and explain whether a Creditors’ Voluntary Liquidation is appropriate.
If there are particular assets you hope to keep, tell us. We can explain how a proper sale may work and what needs to happen to protect the interests of the company’s creditors.
Call Anderson Brookes on 0800 1804 935 for free, confidential initial advice.