A Creditors Voluntary Liquidation is a voluntary liquidation process that is there to bring an end to an insolvent company. It is worth noting, though, that liquidation is not only for insolvent businesses.
A Members Voluntary Liquidation (MVL) is for solvent companies that want to bring their business to a close. Putting a business into an MVL allows a company to extract proceeds in a tax-efficient and cost-effective way. It also allows the business to be wound down in a calm manner.
You must sign a declaration of solvency that demonstrates that the company is solvent and able to pay all of its outstanding creditors, if you want to go into an MVL solution. Lying in order to sign a declaration of insolvency is a very serious matter and you can get into big trouble.
With that in mind, it’s imperative that you talk to a fully licensed insolvency practitioner before you jump into any liquidation solution. They will be able to offer the best advice for you and your company, ensuring that you don’t make any life-changing mistakes when trying to find a solution for your situation.
How do I place my company into a Creditors Voluntary Liquidation?
A CVL can only be created under the assistance of a licensed Insolvency Practitioner (IP). An IP will be able to help you with good advice that you need to sort out your financial situation.
A CVL can only be entered into under the guidance of a licensed Insolvency Practitioner. An Insolvency Practitioner will be able to give you the sound, practical advice you need when dealing with a distressed company and you are highly encouraged to speak to one at the earliest signs of insolvency. They will be able to discuss the various options available to you and your company which may involve rescue and restructuring procedures such as Administration or a CVA.
How long does a CVL take?
It takes 14 days to put a company into a CVL, following the date it has been agreed. If 90% of shareholders agree to a short notice, liquidation can happen in half of that time (7 days). 7 days is the minimum statutory notice period to creditors.
What happens when a CVL is completed?
Following completion of the Creditors Voluntary Liquidation, the company will cease to exist as it will have been struck off the Company House register. Unpaid liabilities will be written off unless they were personally guaranteed.
Throughout liquidation, the liquidator must investigate any actions taken by directors and former directors within the last three years. If they do not do this properly, they could be found guilty of wrongful trading, fraud, or misfeasance. Such an act could result in directors being made personally liable for some or all of the company’s debts; they might also be disqualified from being the director of any company for up to 15 years. Nonetheless, such instances are very rare and directors are usually able to move on to a new business venture if they wish to do that.
How to get in touch with us
If you’re a business owner and you’re not sure where to turn with your financial predicament, contact the good people at Business Helpline. They can guide you down the right path for a CVL. Call 0800 088 2142.
Click on the link for more FAQs on Creditors Voluntary Liquidations.