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 will hold a meeting to resolve placing a company into CVL and instruct an Insolvency Practitioner to commence and assist with the necessary statutory procedures.
- Following the meeting of the Board to commence the Liquidation process, shareholders will be notified of a general meeting and creditors will be notified using the deemed consent procedure, which advises creditors that the Company will be placed into liquidation and that a liquidator will be appointed on a specific date (Decision Date) unless sufficient objections are received.
- Prior to the Decision Date, creditors will be presented with a Statement of Affairs and Report of the company compiled with the information provided by the director(s). This will set out the financial position of the company, detailing its assets and liabilities, providing estimated realisable values of company assets and a deficiency account.
- At the shareholders’ meeting, which is usually held on the same day as the Decision Date, the shareholders resolve to place the company into CVL and nominate an Insolvency Practitioner of their choice to be the appointed Liquidator.
- On the basis that creditors do not object to the shareholders decision to nominate a Liquidator by 23:59 on the Decision Date then his/her appointment will be confirmed.
- The appointed Liquidator will then take control of the company, realise assets, deal with statutory reporting, carry out his/hers investigations, pay costs of the liquidation and if there are sufficient funds, will distribute these to the amongst the creditors before finalising the liquidation (after which the company is dissolved).
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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