CVL – Creditors Voluntary Liquidation
- CVL is the most commonly used company insolvency process in the UK
- This liquidation gives directors the opportunity to purchase the business assets and goodwill and then re-open the business within another company
- This is a director-led process and can only be initiated by the director
What is a Creditors’ Voluntary Liquidation?
Richard Simms; Insolvency Practitioner, explains Creditors Voluntary Liquidation and the circumstances in which it is used.
A CVL is a director led process that sees an insolvent company voluntarily placed into liquidation. The process begins on the date of the directors meeting and the company is placed into liquidation occurs the subsequent meeting of creditors. (Please see below for further details)
Please note: A CVL does not have to mean full closure for the underlying business. The company director will have the opportunity to purchase the company’s assets and re-open the business within another company. To find out more about this option please contact us now.
Insolvency Warning Signs
Insolvency rarely happens instantaneously. Symptoms can develop over time, but the important thing to remember is that the sooner advice is sought after any symptoms are seen the more chance the company has of being rescued.
Some of these symptoms can include:
- High monthly creditor payments above current period purchases
- Dip in the market place
- Loss of key customer
- Unable to receive further credit
- Bad debt
In order to foresee these causes early on, company directors need to ensure that their books and records are kept on top of as this will give them time to plan and react accordingly.
If it has however reached the point where these issues have affected the company and the business then it is worth seeking some professional advice on what the next best step will be for your circumstance.
One of the next steps could be a CVL.
3 key stages to a Creditors’ Voluntary Liquidation process
Stage 1- The Directors Meeting
5 resolutions will be passed within this meeting of the board of directors. The key ones include; recommending that the company go into a CVL and authorising both members and creditors meetings.
Stage 2- The General Meeting
The General Meeting is for members of the company and is designed to pass 3 resolutions; confirming the company can no longer trade solvently, to name the appointed liquidators, to say any act passed can be signed by the liquidators.
Stage 3- The Creditors Meeting
The purpose of the creditors meeting is to confirm the appointment of the liquidator and to explain the state of the company’s affairs. It is also a chance to establish a liquidation committee and if not, then to confirm the liquidator’s remuneration.
Please note: When it comes to the final meeting, creditors can tackle the completion of the voluntary liquidation if they feel some issues have not been addressed. This instance will push back the date of the liquidation closure as the liquidators will need to investigate the creditors’ claims.
How can FA Simms help?
For a Creditors’ Voluntary Liquidation, FA Simms makes sure all relevant paperwork and meetings are completed efficiently and as soon as possible to move the liquidation process on. Our liquidation costs are extremely competitive and start from £2,500 fully inclusive. We assign 2 liquidators and a case manager to each case so there is always someone available to answer your questions.
Download CVL Help Sheet
Download: Creditors’ Voluntary Liquidation (CVL) Help Sheet