If you have started preparing to place your company into a Creditors’ Voluntary Liquidation (CVL), you may be wondering whether you can change your mind and stop the process.
In some circumstances, yes – but timing is crucial.
Before shareholders formally pass the resolution to wind up the company, it may still be possible to decide not to proceed with the CVL.
Once the resolution has been passed, however, the company has formally entered voluntary liquidation. Under section 86 of the Insolvency Act 1986, a voluntary winding up commences when the winding-up resolution is passed.
Quick Answer: A proposed CVL can usually be stopped before shareholders formally pass the resolution to wind up the company. Once that resolution has been passed, the voluntary liquidation has legally commenced and directors cannot simply cancel or withdraw the CVL.
If circumstances change while you are preparing for liquidation, it is therefore important to speak to your insolvency practitioner before the company formally enters CVL.
When does a CVL officially begin?
There is an important distinction between preparing for a CVL and the company actually being in liquidation.
Directors may already have spoken to an insolvency practitioner, supplied financial information and begun preparing the documentation required for the CVL process.
The critical point is the shareholders’ winding-up resolution.
At least 75% by value of the shareholders voting must agree to the winding up. Once that resolution is passed, the voluntary liquidation formally begins.
That makes the timing particularly important if directors are reconsidering whether liquidation is still necessary.
Can a CVL be stopped before the shareholders’ resolution?
Potentially, yes.
If the winding-up resolution has not yet been passed, the company has not formally entered the CVL.
Directors may reconsider the proposed liquidation if circumstances have materially changed. This might happen because:
- a significant customer pays an overdue debt
- new investment becomes available
- shareholders inject additional funding
- refinancing becomes available
- creditors agree to revised payment terms
- a viable restructuring proposal emerges
- the financial position proves better than initially expected
However, stopping preparations for a CVL does not automatically solve the company’s financial problems.
If the company remains insolvent, directors still need to consider whether continuing to trade is appropriate and whether there is a realistic route back to financial stability.
Our guide to how a company can avoid liquidation explains the main rescue options.
Can you cancel a CVL after the resolution has been passed?
Not simply because the directors or shareholders have changed their minds.
Once the winding-up resolution has been passed, the voluntary winding up has commenced. An authorised insolvency practitioner is appointed as liquidator to take charge of liquidating the company.
The CVL has therefore moved from a proposed course of action to a formal insolvency process.
Directors cannot simply withdraw it and resume running the company as before.
If unusual circumstances arise after the CVL has commenced, specialist insolvency and legal advice should be taken regarding the options available.
What if the company suddenly has enough money to pay its debts?
If the company’s financial position improves before the winding-up resolution is passed, the position should be reassessed immediately.
For example, the company may receive:
- a large outstanding customer payment
- confirmed investment
- shareholder funding
- proceeds from the sale of an asset
- refinancing
If the funding genuinely allows the company to deal with its liabilities and continue trading sustainably, liquidation may no longer be the appropriate option.
If the company has already entered CVL, however, receiving additional money does not automatically cancel the liquidation. The company is already subject to a formal winding-up process.
What alternatives may be available instead of CVL?
If the CVL has not formally commenced and the underlying business remains viable, other options may be available.
Company Voluntary Arrangement
A Company Voluntary Arrangement (CVA) allows an insolvent company to reach a binding agreement with creditors to repay all or part of its debts over an agreed period.
The company can continue trading during a CVA, making it fundamentally different from a CVL.
Administration
Administration may be appropriate in certain circumstances where there is a realistic prospect of rescuing the company or achieving a better outcome for creditors than immediate liquidation.
See our guide to CVL vs Administration for the key differences.
Informal creditor agreements
Where financial difficulties are temporary, creditors may sometimes agree to revised payment arrangements.
Government insolvency guidance recognises informal agreements with creditors as one possible option, although they do not provide the same protections as a formal insolvency procedure.
The important question is whether the business has a credible route back to sustainable trading, rather than merely enough money to postpone liquidation.
What if a winding-up petition has already been issued?
A proposed CVL and a creditor’s winding-up petition are separate matters.
If a creditor has already presented a petition seeking the compulsory liquidation of the company, directors should seek insolvency advice immediately.
Beginning preparations for a CVL does not automatically make existing court proceedings disappear.
The options available will depend on the stage reached by the petition, the company’s financial position and whether there is still a viable alternative to compulsory liquidation.
Read our winding-up petition guide for more information.
Is stopping a CVL always a good idea?
No.
Being able to stop a proposed CVL before it formally begins does not necessarily mean doing so is in the best interests of the company or its creditors.
Directors should distinguish between a genuine financial recovery and a short-term improvement that simply delays the underlying problem.
For example, stopping the CVL may not be appropriate if:
- the company still cannot pay debts when they fall due
- substantial creditor arrears remain
- enforcement action is continuing
- new funding simply creates additional debt
- the business has no realistic prospect of returning to sustainable profitability
Where a viable rescue is possible, it should be explored. Where it is not, delaying liquidation may simply increase losses.
How long do I have to change my mind?
There is no single period that applies to every proposed CVL.
What matters is which stage of the process has been reached.
The key legal point is the shareholders’ winding-up resolution. Once that resolution has been passed, the voluntary winding up has commenced.
Our CVL timeline explains the wider stages and typical timescales.
still director-led CVLs, suggesting many businesses are recognising financial distress and acting before creditor enforcement begins.
For directors, timing remains critical. Early advice can often preserve more options and lead to better outcomes, whether that is rescue, restructuring, or orderly closure.
Speak to Business Helpline before stopping a CVL
If you have started preparing for a CVL but your circumstances have changed, speak to us before making a decision.
Our licensed insolvency practitioners can review:
- how far the CVL has progressed
- whether the winding-up resolution has been passed
- whether the company remains insolvent
- current creditor pressure
- new funding or investment
- whether restructuring is realistic
- whether another insolvency procedure may be more appropriate
The earlier the position is reviewed, the greater the opportunity to consider realistic alternatives before the company formally enters liquidation.
Call Business Helpline on 0800 088 2142 for free, confidential advice.
FAQs
Can I change my mind about a CVL?
Potentially. If the winding-up resolution has not yet been passed, it may still be possible to decide not to proceed. Once the resolution has been passed, the voluntary winding up has formally commenced.
Can a CVL be withdrawn?
A proposed CVL may potentially be stopped before formal commencement. Once the company has formally entered liquidation, directors cannot simply withdraw the process themselves.
Can a CVL be reversed?
A CVL cannot simply be reversed because directors change their minds after it has commenced. Exceptional circumstances should be discussed with the liquidator and appropriate legal advisers.
Can the company continue trading if the CVL is stopped?
Potentially, but stopping the proposed liquidation does not make an insolvent company solvent. Directors should first establish that there is a realistic and sustainable route forward.
What happens if funding arrives before the CVL starts?
The company’s financial position should be reassessed. If the funding genuinely allows the business to meet its liabilities and remain viable, CVL may no longer be necessary.
When is it too late to simply stop a CVL?
The key point is the passing of the shareholders’ winding-up resolution. The Insolvency Act 1986 provides that voluntary winding up commences at that time.
