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What is a Creditors' Voluntary Liquidation

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Creditors' Voluntary Liquidation process


Written by Jonathan Munnery

A Creditors’ Voluntary Liquidation – or CVL – is a formal insolvency process for insolvent limited companies. If a company is experiencing extreme financial distress, and there is no realistic chance of being able to turn around its fortunes, the company can be liquidated which will bring all company affairs to an orderly end.

A CVL can only be entered into under the guidance of a licensed insolvency practitioner. It will be the insolvency practitioner’s job to assess the company’s position, identify company assets, and liaise with all outstanding creditors throughout the process.

Once all assets have been realised and the proceeds distributed to creditors, the company will be formally dissolved and its name eventually removed from the register held at Companies House. All remaining debts – except any which have been personally guaranteed – will be written off and the company will cease to exist as a legal entity.

Although nobody goes into business expecting their company to fail, UK Liquidators were supportive and helpful through the whole liquidation process, and I would have no hesitation recommending them to others in the same position.
Paul Winter
|
Director
Common Questions
Is a CVL right for my company?

Whether a CVL is appropriate for your company depends on a range of factors including the financial position of the company, the likelihood of the business being able to return to a profitable position, and the desire of its directors to effect a recovery.

What is the role of an insolvency practitioner in a CVL?

As a formal insolvency process, a CVL can only be entered into under the guidance of a licensed insolvency practitioner who will adopt the role of the company’s liquidator.

Who initiates a Creditors' Voluntary Liquidation?

A CVL is a voluntary liquidation process which is initiated by the director(s) of a distressed limited company. Many company directors choose to place their company into liquidation when it is clear it has no future.

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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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