Creditors Voluntary Liquidation (CVL)
Creditors Voluntary Liquidation (CVL) may be the solution if your company is suffering from creditor pressure, cash flow difficulties, or liabilities that are greater than assets.
A CVL is a procedure in which the company’s directors choose to voluntarily bring the business to an end by appointing a licensed insolvency practitioner like Gibson Hewitt to liquidate all assets.
The liquidation or ‘winding up’ process allows you to use company’s assets to pay off its debts – with any money left over being paid to its shareholders. If your business is unable to pay its debts, it is important to act fast to prevent putting directors at risk of facing action for wrongful trading or fraudulent preference. In some cases, particularly if you take no action, you may be forced into compulsory liquidation.
- The business stops trading
- The employees are all made redundant
- All assets, and possibly the business, are sold to pay creditors
- Quickly removes creditor pressure
- Stops further legal action
- Continue trading
- Allows your employees to claim unpaid wages and redundancy pay from the government
- Protects any personal liability of the directors
How it works:
- Directors hold a board meeting resolving to place the company into liquidation and call a meeting of shareholders.
- Shareholders pass a Special Resolution to close the company via a Creditors Voluntary Liquidation.
- Shareholders vote on the resolution, and appoint a liquidator. A 75% majority is needed in favour to pass the resolution. Those that don’t vote don’t count.
- Creditors are given notice of a separate meeting, to approve the liquidator, or choose their own. This usually follows straight after the shareholders meeting on the same day.
- The Insolvency Practitioner will then realise assets, agree the creditors’ claims and carry out all necessary procedures required by the Insolvency Act and Rules and report to creditors and shareholders by way of progress reports.
How long does it take?
- From the day the directors agree to liquidate, it takes 14 days to put a company into Creditors’ Voluntary Liquidation. If 90% or more of all shareholders agree to short notice, then the liquidation can happen within seven days (this is the minimum statutory notice period to creditors).
Gibson Hewitt are insolvency professionals and pride ourselves in providing clear expert advice for when things are not going as planned. We offer bespoke solutions to our clients’ problems in a professional, confidential manner.
Contact Lynn Gibson now for a FREE initial consultation with no obligation to proceed.