Creditors’ Voluntary Liquidation (“CVL”)
A CVL is a process that is commenced by the directors of an insolvent company who have resolved to wind down its affairs.
A CVL is effectively the end to the life of a company. Once its affairs are wound down it will be dissolved.
It is however possible that the core business of a company can survive this process, being an asset of the company that can be sold to a third party.
How Does A CVL Work?
The pre-requisite for a CVL is that the company is insolvent. Insolvency can either be inadequate cash flow or when a company’s assets are less than its liabilities. If this has been established, and on the basis that the advice subsequently provided by a professional Insolvency Practitioner is that a CVL is the correct option, the following process is invoked:
- The Board resolves to place a company into CVL and instructs an Insolvency Practitioner to commence the necessary statutory procedure;
- Following the meeting of the Board, notices to shareholders and creditors are circulated advising them of the fact that the company is proposing to be placed into CVL and notifying them of the time and date of their respective meetings to consider those resolutions;
- A directors’ report is compiled for the shareholders and creditors providing a statement of affairs and detailing why the company failed;
- At the shareholders’ meeting, the shareholders resolve to place the company into CVL and nominate an Insolvency Practitioner of their choice to be the appointed Liquidator;
- At the creditors’ meeting, the creditors will look either to ratify the appointment of the shareholders’ choice of Liquidator or to seek the appointment of an alternative Liquidator of their choosing; and
- The appointed Liquidator will then look to wind down the company’s affairs, liquidating the company’s assets and reporting to creditors.
The procedure to place a company into CVL from Board resolution to the creditors’ meeting and can take as little as 9 days. The subsequent amount of time that the Liquidator will need to deal with winding down the company’s affairs depends upon the complexity of the case.
How can SFP Group Assist with a CVL?
- You will have immediate access to professional award winning advice;
- We can determine whether or not a CVL is appropriate in your circumstances and if not, recommend and provide alternative options;
- Assist with drafting the requisite CVL paperwork to circulate to your company’s shareholders / creditors; and
- Act as Liquidator of the CVL.
Seek professional help as soon as possible
No matter what the reason, if you are experiencing financial difficulties the key is to seek early professional advice.
The SFP Group has been voted the best business recovery specialists in the UK by the Business Moneyfacts Awards over the past 5 years and are experts at helping you find a solution which works. Fill in our call back form or call us now on 020 7538 2222.
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