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Creditors’ Voluntary Liquidation (CVL) is an insolvency process initiated by company directors when a business can no longer pay its debts. A licensed insolvency practitioner is appointed to sell assets and distribute funds to creditors. CVL allows orderly closure, ensures legal compliance, and helps protect outstanding creditors from suffering further financial losses.
When a limited company is insolvent – meaning either its debts are greater than its assets, or it is unable to pay its bills and other outgoings as and when they fall due – directors need to make a decision whether the company has a realistic possibility of being turned around, or whether it should be placed into liquidation to prevent the situation from worsening.
Concerned about the National Insurance increase?
For the 2024-25 tax year, the rate of employer National Insurance increases from 13.8% to 15% adding yet more pressure onto already squeezed cash flows. If you are worried about the impact this could have on your company’s finances, talk to the experts at UK Liquidators. As licensed insolvency practitioners we can explain your options and help you plot a way forward. Call today on 0800 063 9262.
When a company is liquidated, all its assets are sold with the proceeds being distributed amongst outstanding creditors. The company will eventually be dissolved and it will cease to exist as a legal entity. An insolvent company can be liquidated either through a compulsory court order, or through a voluntary process known as a Creditors’ Voluntary Liquidation (CVL).
A CVL is a director-initiated liquidation process which must be administered by a licensed insolvency practitioner. Once the director – or directors – of a limited company know the business to be insolvent, they can decide to voluntarily shut down the company by placing it into a CVL. They will select an insolvency practitioner of their choosing who will work towards realising company assets, and ensuring the company is wound down in an orderly manner in accordance with the Insolvency Act 1986.
Director Redundancy Entitlement – Did you know that as a limited company director, you may be entitled to claim redundancy if your company enters into an insolvent liquidation process? We can point you towards a fully regulated third party who can provide advice on your right to claim director redundancy if this is applicable to your situation. To understand if you are entitled, give a member of our team a call on 0800 063 9262, or email advice@ukliquidators.org.uk.
Liquidation Portal
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The appointed insolvency practitioner will be responsible for dealing with all outstanding creditors throughout the liquidation process, as well as distributing all available company assets as per a designated order of priority depending on the class of each creditor. Creditors will be paid in the following order:
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Although a CVL is considered a voluntary process, the reality is that when it gets to this stage, often directors have no choice left but to place their company into liquidation.
As the director of an insolvent company, you have a legal responsibility to protect the interests of your creditors and to refrain from any action which may worsen their position. Once you know your company to be insolvent, your creditors’ interests must be placed above your own and those of other shareholders.
By being proactive and taking the step to voluntarily liquidate your company, rather than waiting until you are forced into compulsory liquidation, demonstrates your responsibility to adhere to your legal duties as a limited company director, as well as showing a duty of care to your creditors.
Start your online liquidation today
If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.
At UK Liquidators, our service is fully partner-led and your case will always be overseen by a fully licensed insolvency practitioner.
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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