What Is Creditors' Voluntary Liquidation?
A Creditors’ Voluntary Liquidation (CVL) is a formal process that is used when a company is insolvent and unable to pay its debts. Initiated by the company’s directors or shareholders, the process can be managed by a licensed insolvency practitioner who will oversee the smooth sale of assets, settle outstanding debts and ensure regulatory compliance with legal obligations, helping directors close the business efficiently and responsibly.
When Is a Company Insolvent?
A company is considered insolvent if it cannot meet its financial obligations. This is assessed using:
- Cash flow test – determines if the company can pay debts as they arise
- Balance sheet test – compares assets versus liabilities to see if the company’s debts exceed its assets
Common signs of insolvency:
- Unable to currently pay HMRC liabilities
- Overdue creditor payments
- County Court Judgments
- Bailiff action or statutory demands
- Increasing debt with no realistic recovery plan
Why Choose a Creditors’ Voluntary Liquidation?
A CVL procedure allows directors to take control when closing an insolvent company. It halts creditor pressure, reduces the risk of wrongful trading and ensures professional management of all creditor claims. With the guidance of a licensed CVL insolvency practitioner, the company can be wound down in an orderly, compliant manner, providing clarity, peace of mind and protection for directors, stakeholders and employees.
Why Choose Griffin And King?
Griffin & King combine deep CVL insolvency expertise with a personalised, supportive approach to Creditors’ Voluntary Liquidation. With decades of experience helping businesses through financial difficulty, they review all options with clarity and guide directors to the right solution for their circumstances. Their team provides clear, jargon‑free advice, regular communication and professional handling of creditor engagement, ensuring the liquidation process is managed efficiently and compliantly.
Clients consistently praise our team for their responsiveness, compassion at challenging times and practical support, making Griffin & King a trusted partner for winding up an insolvent company.
We're Liquidation Experts
- 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…
Creditors' Voluntary Liquidation Step by Step Process
The Creditors’ Voluntary Liquidation process begins when you contact Griffin & King’s liquidation experts to discuss your situation. A qualified and dedicated team member will review your company’s position, listen to your concerns, future plans and recommend the most suitable course of action.
You then decide whether to proceed with a Creditors’ Voluntary Liquidation or explore other options. Once instructed, Griffin & King manage the winding-up process, including dealing with creditors and employees. Your dedicated case manager will answer any questions, and your progress will be closely monitored throughout by an experienced CVL Insolvency Practitioner, ensuring a smooth, compliant and professional closure of your company.
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.
FAQs
Can HMRC stop a CVL?
HMRC cannot stop a Creditors’ Voluntary Liquidation if a company is insolvent, as the decision to enter CVL is made by the directors. However, HMRC, as a creditor, will be notified and is well within their rights to submit claims for unpaid taxes. The appointed insolvency practitioner manages these claims alongside other creditors, ensuring statutory compliance and that all debts are handled fairly. HMRC may also investigate past company transactions if they suspect wrongful or preferential trading, but this does not prevent a CVL process from proceeding..
Can I start a new business after CVL?
Yes, directors can start a new business after a company CVL, provided there is no wrongful trading or misconduct during the previous company’s insolvency. The insolvency practitioner may review past actions to ensure compliance with legal obligations, but most directors are free to set up a new business once the old company is formally liquidated. It’s important to act transparently and avoid trading while insolvent in the new venture. Proper guidance from licensed CVL insolvency practitioners can help directors understand their responsibilities and plan future business activities safely.
Will my CVL be advertised publicly?
Yes, once a CVL is initiated, details are published in the London Gazette as a legal requirement. This provides public notice of the company’s liquidation to alert creditors and other stakeholders. Publishing ensures transparency in the process, protects directors from future liability, and allows creditors to submit claims for outstanding debts. While the announcement is public, it contains only essential company and practitioner details, not sensitive business information. The formal notice marks the start of the winding-up procedure, ensuring the CVL process is conducted legally and that all parties are informed of their rights and responsibilities.
Can creditors object?
Creditors have the right to object to a CVL, typically if they believe the liquidation is not in their best interest or if they suspect misconduct of some kind. Objections are raised formally through the appointed insolvency practitioner or by petitioning the court.
In real world practice, objections are rare when the CVL is conducted correctly, as the process is designed to handle debts in the correct manner. The team will review any objections, ensure compliance with legal obligations and work to protect both creditor and director interests.
What happens if there are no assets?
If a company has no assets, a Creditors’ Voluntary Liquidation can still proceed. The insolvency practitioner will formally wind up the company, but creditors will not receive payments, as there are no funds to distribute. The process ensures legal obligations are met, including filing statutory documents, notifying HMRC and properly closing the business. Directors are not personally liable for debts unless wrongful trading or misconduct is identified. Completing a CVL in these circumstances allows the company to be dissolved legally, providing closure for directors and preventing ongoing creditor pressure.
What happens to directors in a CVL?
During a CVL, directors will remain involved in the decision to liquidate but are no longer responsible for managing the company once the insolvency practitioner is appointed. The practitioner takes control of company assets, creditor communication and compliance matters. Directors must cooperate fully, providing records and information as required. While directors are generally protected from personal liability for company debts, any evidence of wrongful trading, misconduct or failure to comply with statutory duties could result in personal consequences.
What happens to employees in a CVL?
Employees are protected under employment law during a CVL. Once the company enters liquidation, the insolvency practitioner becomes responsible for employee matters like redundancy payments, notice periods and outstanding wages. Staff may be made redundant as part of the winding-up process, but claims for unpaid wages, holiday pay and statutory redundancy can be submitted to the insolvency practitioner directly and even the government’s National Insurance Fund.
What happens to company debts in a CVL?
In a CVL procedure, the appointed insolvency practitioner assesses all company debts and liabilities. Assets are realised and distributed to creditors based on priority, starting with secured creditors and then unsecured creditors. If there are insufficient assets, creditors may receive only partial payment or nothing at all. The CVL process ensures debts are addressed in an orderly, legally compliant manner.