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Creditors’ Voluntary Liquidation
A Creditors’ Voluntary Liquidation (CVL) is a process that allows Directors to voluntarily close an insolvent company voluntarily. This occurs when the value of the assets of the company are not enough to be able to clear all of the debts.
If a company cannot pay its debts (no part of the business can be sold or is worth trying to salvage), it is officially insolvent, and the company directors must act in the best interests of the creditors. In comparison with compulsory liquidations whereby the closure of the company receives a winding up order and the closure is forced, voluntarily instigating a CVL allows the directors to retain more control over the situation.
Of course, we will carefully review the business with you to make sure the right process is chosen to effectively deal with your company.
An insolvency practitioner at Griffin & King can act as Liquidator of a company in order to assist directors in the formalities of winding up a company. Only a licensed insolvency practitioner can liquidate an insolvent company.
It is important that directors take advice at an early stage when liquidating the company, as they need to understand their responsibilities as company directors of an insolvent company. To minimise the loss to creditors knowing that the company is insolvent might lead to potential personal liabilities for the company directors in the future.
A benefit of a CVL is that unlike in a Compulsory Liquidation, directors can choose their own Liquidator. Once appointed, the Liquidator will establish any company assets and make distributions to creditors.
How we efficiently manage your CVL
The trade will need to stop once it has been decided that the company will enter into CVL. We will advise you on the exact timing of this and we will also need to consider:
- Any work in progress and possible completion of that work, if possible.
- Any creditor action such as bailiffs being instructed or a winding up petition issued.
- Continued occupation of premises and liaising with the landlord.
- Releasing of employees... and so on...
As the appointed liquidator for your CVL we will continue to:
- Liaise with creditors and resolve any issues with creditor claims.
- Take steps to sell the equipment and plant.
- Commence collection of outstanding book debts.
- Carry out reports to the government bodies.
- Deal with employee claims and so on...
Why put a Company into Creditors’ Voluntary Liquidation (CVL)?
Here are the reasons for putting a company into CVL:
- The company has received a winding up petition or statutory demand from a creditor which it cannot pay. Therefore, needs to place the company into a Creditors Voluntary Liquidation instead of facing a Compulsory Liquidation.
- The company may be insolvent as a result of its liabilities exceeding the assets of the company. Business losses are increasing and continuing to trade may infringe on wrongful trading.
- The company can no longer afford to pay its rent; therefore, the landlord has appointed bailiffs to seize any company assets.
- The company has missed payment/s agreed with HM Revenue & Customs; therefore, the company has been issued a winding up petition.
- The company is in debt and can no longer meet liabilities, as a result creditor have not been paid and are now demanding payment.
- There has been a shift within the company’s industry which has impacted the business’ ability to trade.
Voluntary Liquidation Process Completion
Your in-depth involvement with the company will effectively cease once the trade has stopped. You will need to liaise with us so that we can deal with all matters of voluntary insolvency as effectively as possible. This may involve telephone calls and occasional meetings.
At the end of the process there may be a dividend to creditors if enough funds have been realised. The company will eventually be struck off the register of companies’ house once all the monies have been distributed and necessary clearances received. This can usually take up to two years from the date that trade ceased.
Once the insolvent company has been liquidated the debts are wiped out along with the limited company itself.
Creditors' Voluntary Liquidation Process
If you believe your company may be insolvent -
- Contact our Liquidation experts here at Griffin & King.
- Your company position will be fully discussed with a qualified member of the Griffin & King team. We will listen carefully to your concerns, worries and future plans and suggest a plan that takes these into account.
- Based on these discussions you will decide to either place the company into Liquidation or consider other options.
- Formally instruct Griffin & King to wind up your company by signing several forms.
- The winding up procedure will commence immediately.
- We will deal with your creditors and employees.
- You will be allocated a case manager to your case who will be pleased to answer any questions that you have, however futile you believe these maybe.
- Your progress will be monitored carefully, always by an Insolvency Practitioner.
If your limited company is insolvent, a Creditors’ Voluntary Liquidation (CVL) is very often the best way to deal with the situation.
The directors of the company can deal with the debt issues, learn from any mistakes that were made and start a fresh - most importantly, whilst ensuring that all the legal duties to the company’s creditors are met.
For our Creditors' Voluntary Liquidation Online Service please click here.