Creditors Voluntary Liquidation (CVL)
If the company is experiencing financial difficulty and there is no prospect of continuing to trade then you should consider using a CVL procedure (Creditors Voluntary Liquidation) to wind down its affairs.
A CVL is a formal process for voluntarily winding up a company when it is insolvent (defined by insolvency legislation as when a company cannot pay its debts as and when they fall due or where its liabilities exceed its assets).
We can guide you every step of the way through a CVL as it can be a difficult and stressful period.
A CVL is a very quick, cost-effective way of formally closing down a company and complying with your duties as a director.
Protect yourself from legal action by taking professional advice and initiating the Creditors Voluntary Liquidation (CVL) process.
When is a CVL appropriate?
This procedure is only appropriate if your company is insolvent.
â¨For example if:
- Its liabilities exceed its assets and/or
- It cannot pay its debts as when they fall due and
- There is no prospect of the company continuing to trade
The CVL Process
Board Decision
- Directors confirm the company is insolvent
- Appoint an insolvency practitioner
- Plan shareholder and creditor meetings
Pre-Liquidation
- Company usually stops trading
- Directors prepare Statement of Affairs for creditors and Companies House
- Provide company history and reasons for insolvency
- Costs paid from company assets if available
Shareholders’ Meeting
- Vote to wind up the company (75% majority)
- Nominate a liquidator (simple majority)
- Holder of a qualifying floating charge must get 5 working days notice
Creditors’ Meeting
- Deemed Consent
- Creditors get the resolution and Statement of Affairs
- If no objections, liquidator is automatically appointed
- Virtual Meeting
- Usually the same day as shareholders’ meeting
- Nominate liquidator and committee
- Notice sent at least 3 business days prior (best practise: 2 weeks)
- Physical Meeting
- Called if objections are raised
- Held within 14 days with at least 3 business days notice
After Liquidatorâs Appointment
- Notify all relevant parties and communicate with creditors
- Collect and protect company assets
- Realise assets and book debts
- Assist employees with redundancy claims
- Report on directors’ conduct to authorities
- Manage company pension schemes
- Agree creditors’ claims and make distributions
- Prepare reports and close the liquidation efficiently
