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Checklist for Creditors’ Voluntary Liquidation

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Creditors’ Voluntary Liquidation is a formal insolvency procedure available to insolvent limited companies. If your company has entered insolvency you need to protect the interests of your creditors, and CVL allows you to meet these obligations.

By voluntarily placing your company into liquidation, as opposed to waiting for a creditor to make a winding up petition at court, you prevent further creditor losses and adhere to the stringent requirements under insolvency law.

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What are the benefits of Creditors’ Voluntary Liquidation?

Apart from the importance of prioritising creditors, you can also protect yourself and other directors from allegations of wrongful trading by entering a CVL. You have more control over the process in terms of timing and the liquidator appointed, and may also be eligible to claim director redundancy.

Here’s a checklist for Creditors’ Voluntary Liquidation to provide an outline of the different stages of the procedure. The time it takes to liquidate a company largely depends on the complexity of its affairs, including the number and type of assets.

  • Obtain guidance from a licensed insolvency practitioner (IP)
    You need to seek professional assistance as soon as the company enters insolvency. A licensed IP will confirm the financial position of the company and advise on your options. If liquidation is the only available route, you’ll need to convene a meeting of the board.
  • Arrange a board meeting of directors
    A board meeting is held to make a decision on placing the company into liquidation. If you’re a sole director you need to document your intention to enter the CVL, and formally note your resolve to arrange a meeting of shareholders.
  • Convene a shareholders’ meeting
    At the shareholders’ meeting, members officially pass a resolution to enter voluntary insolvent liquidation if 75% of shareholders (by value of shares) vote in favour. The company enters liquidation when the resolution is passed, and the shareholders also decide on a liquidator.

    Your control as a director ceases at this point, but you must assist the liquidator with their enquiries. A copy of the resolution to enter Creditors’ Voluntary Liquidation is filed at Companies House, and an advert placed in the Gazette.
  • Notify creditors
    In-person creditors’ meetings are now rare, and creditors are typically informed by post or electronic means. They’re provided with information on the company’s financial situation in the form of a report, and can sanction the liquidator’s appointment or put forward their own choice.
  • The liquidation process
    The liquidator ensures company assets are professionally valued for sale at auction, and the funds generated used to repay creditors in the statutory order. If you plan to start a new business, you may be able to negotiate with the liquidator to purchase some or all of your company’s assets.
  • Following liquidation
    When the liquidator has distributed funds to creditors where possible, the company is struck off the register of companies at Companies House. Any debts that remain unpaid are written off.

Liquidator’s investigation

Part of the liquidator’s role is to investigate how the company failed, and uncover any specific reasons why it had to enter insolvent liquidation. They’ll look for instances of wrongdoing or misconduct that could have led to the company’s demise. Having entered liquidation voluntarily, however, you’ve clearly placed the interests of your creditors first and so are unlikely to face allegations of wrongful trading.

In addition to gaining more control over the liquidation process, entering CVL could also enable you to claim director redundancy pay. For more information and advice on Creditors’ Voluntary Liquidation, please contact our team at Real Business Rescue to arrange a free, same-day consultation.

We’re insolvency experts and will offer the clear, reliable advice you need. We operate an extensive network of offices around the country, so you’re never far away from professional assistance.

Jonathan Munnery
Partner

If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.

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Checklist for Creditors’ Voluntary Liquidation
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As a Limited Company Director you may be entitled to claim Director Redundancy - Average UK claim is £9,000*.
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If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.

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