Creditors’ Voluntary Liquidation (CVL) 2018-01-05T09:18:11+00:00

Creditors’ Voluntary Liquidation

A Creditors’ Voluntary Liquidation (‘CVL’) is the most common form of Liquidation in the UK. It is a suitable insolvency procedure for an insolvent company where no appropriate rescue procedure is available, such as a Company Voluntary Arrangement (‘CVA’) or Administration. The appointed Liquidator, a licensed Insolvency Practitioner, will wind down the affairs of the company and realise its assets with a view to paying a dividend to creditors.

A CVL allows directors and shareholders to wind-up an insolvent company and appoint a Liquidator. CVL should not be confused with Compulsory Liquidation, the process where one or more of the company’s creditors’ presents a winding-up petition to the Court to force the company into Liquidation.

It may be possible for directors, shareholders or other parties connected to the company to acquire the assets of the insolvent company at market value from the appointed Liquidator. The interested party should advise the Liquidator of his interest and submit a formal offer. If the offer is in line with market value, and no higher offers are received, a sale of the assets can be effected by the Liquidator following his appointment.

A CVL could be a suitable option if your company is insolvent. Insolvency arises where a company has insufficient assets to pay its debts, known as the “balance sheet test”, or is unable to pay its debts when they fall due, known as the “cash-flow test”. The balance sheet test will be satisfied where a company has insufficient assets to be able to meet all of its liabilities, including prospective and contingent liabilities, as and when they eventually fall due.

When a limited company is placed into CVL, directors and shareholders will not be personally liable for the debts of the company, unless they have signed personal guarantees. Directors can continue to be directors of other companies, can incorporate new corporate entities and pursue new opportunities.

The appointed Liquidator will have extensive powers in the winding-up, including the power to sell the company’s assets, to bring and defend legal proceedings, formally disclaim any onerous property or unprofitable contract entered into by the company prior to liquidation and to make a distribution to the company’s unsecured creditors.

Contact Our Team

If your company is experiencing financial difficulties, we can work with you to identify the most appropriate solution. We have helped companies of all sizes across many different sectors. We understand that being pursued for unpaid debts is a hugely stressful time. Contact us today on 0800 061 4002 should you require any further information regarding a Creditors’ Voluntary Liquidation and the options that may be available to you.



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