Creditors’ Voluntary Liquidation

Suitable for: Insolvent companies who want to wind-up company affairs

The Creditors’ Voluntary Liquidation (CVL) is the most common form of corporate liquidation and out-of-court winding-up of an insolvent company. Once your company’s shareholders resolve to wind-up the company affairs, an insolvency practitioner will need to be appointed. The company will cease to trade, if it has not done so already. A meeting of creditors will be called and the directors will need to report on the company affairs.

The liquidator will then wind-up the affairs of the company and your company’s assets will be sold with the proceeds being used to pay the liquidation expenses and giving a dividend to the creditors.

After the liquidation, your company will be struck off the Companies House Register and it will cease to exist as a legal entity.

Advantages of a CVL:
– The directors and shareholders can control the timing
– The process of placing the company into liquidation can be done within hours of the first meeting
– It helps to reduce the risk of ‘wrongful trading’ and prevents further debt
– It eases the pressure of creditors and the bank as bad debts are written off

Disadvantages of a CVL:
– The liquidator carries out an investigation into the conduct of the directors
– Personal guarantees may be triggered
– There is a small, or no return for the shareholders and directors, and the return for creditors is low
– The likelihood of continued trade is low
– Any tax losses built up on the period prior to liquidation are lost

For further information about CVLs, you can contact Michael Goldstein and his team on 01923 224411, or email him at; michael.goldstein@myersclark.co.uk