Where the company is insolvent (can’t pay its debts), a creditors voluntary liquidation (CVL) is used to achieve liquidation. This is not the only solution though to creditor pressure. With advice from insolvency practitioners (like ourselves), a company voluntary arrangement (CVA) or a pre-pack / company administration could still allow for corporate turnaround.
Creditors voluntary liquidation benefits
- A CVL prevents further losses being incurred, acting in accordance with director duties.
- Allows for a speedy resolution and remote attendance.
- The liquidator has the responsibility of dealing with the creditors and employees.
- As directors have control, they can choose their liquidator and will deal with the same appointed Insolvency Practitioner throughout the CVL process.
- Directors can share information with creditors by way of a company trading history and a statement of affairs, providing clarity.
- A CVL enables employees, including directors in some circumstances, to claim: unpaid wages, outstanding holiday pay, compensation for loss of notice and redundancy pay.
- If the directors, shareholders or even employees wish to purchase assets, this can be discussed with the liquidator, as can any offers from an independent agent.
- 6 benefits of choosing us for your creditors voluntary liquidation.
Creditors voluntary liquidation process
At its start..
A creditors voluntary liquidation requires trading to cease as soon as possible to avoid wrongful trading. A special resolution will be passed at a general meeting of the members to confirm the company can’t continue due to it liabilities and a licensed insolvency practitioner is appointed as liquidator. Any redundant employees will receive payments from the Redundant Payments Office.
During a creditors voluntary liquidation
The creditors will also have the opportunity to attend a virtual meeting by means of a conference call to consider resolutions. The creditors will have been provided with a report and a statement of affairs prepared by the directors.
At its end.
The liquidator will realise the assets and make a distribution to creditors where possible. Once the liquidation is concluded, the company will be dissolved.
In a creditor voluntary liquidation, the Gazette is used to give notice of the special resolution to wind up the company voluntarily.
What is a creditors voluntary liquidation? A solution to creditor pressure.