Timeline for a Creditors Voluntary Liquidation (Step-by-Step CVL Guide)
A company can often be placed into Creditors’ Voluntary Liquidation (CVL) relatively quickly once the required information has been gathered and the formal decisions are in place.
However, completing the entire liquidation usually takes considerably longer.
There are therefore two different CVL timescales to understand:
- Entering CVL – the period between deciding to proceed and the liquidator being appointed.
- Completing the liquidation – the period required for the liquidator to deal with assets, creditors, investigations and outstanding matters before the company is finally dissolved.
The exact timeline varies from company to company.
If you want a detailed explanation of what happens at each stage rather than how long it takes, read our step-by-step CVL process guide.
Quick Answer
There is no single fixed CVL timescale. A company can often enter Creditors’ Voluntary Liquidation relatively quickly once the required information and formal decisions are in place. Completing the full liquidation usually takes much longer and may continue for many months, depending on assets, creditor claims, investigations, tax matters and the complexity of the company.
How Long Does It Take to Put a Company Into CVL?
Putting a company into CVL is normally much quicker than completing the entire liquidation.
How quickly the initial process moves depends largely on:
- how quickly company information can be gathered;
- whether accounting records are up to date;
- the number of creditors;
- whether shareholders are available to make the required decisions;
- whether there are urgent issues such as creditor action or a winding-up petition;
- the complexity of the company’s financial position.
Before the formal process begins, the directors and insolvency practitioner will usually need to establish the company’s assets, liabilities, creditors and overall financial position.
Once the necessary information is available, the formal decisions and creditor procedures can take place.
At least 75% by value of shareholders voting must approve the winding-up resolution before the company can enter CVL.
The resolution must then be sent to Companies House within 15 days and advertised in The Gazette within 14 days.
Rather than assuming every CVL follows a fixed seven-day or 14-day schedule, directors should ask the proposed insolvency practitioner for an expected timescale based on their particular circumstances.
How Long Does It Take to Complete a CVL?
Completing the liquidation is a separate matter.
Once the liquidator has been appointed, they may need to:
- secure and realise company assets;
- collect outstanding invoices;
- review creditor claims;
- deal with employees;
- resolve tax matters;
- investigate company transactions;
- deal with director loan accounts;
- pursue money owed to the company;
- consider director conduct;
- make distributions to creditors where funds are available;
- complete statutory reporting.
The liquidator’s responsibilities include dealing with company assets and investigating the circumstances surrounding the insolvency and director conduct.
For that reason, the company entering CVL does not mean the liquidation itself is almost finished.
A straightforward liquidation with few assets and limited complications can normally be dealt with more quickly than a case involving property, legal disputes, tax enquiries or investigations.
CVL Timeline at a Glance
Rather than following one fixed calendar, a CVL can be divided into five broad phases.
Phase 1 – Initial Advice and Preparation
The directors establish that the company is insolvent and seek advice about whether CVL is appropriate.
Company information is gathered, which may include:
- creditor details;
- bank balances;
- company accounts;
- assets;
- outstanding invoices;
- employee information;
- HMRC liabilities;
- loans and finance;
- director loan accounts.
The speed of this stage depends heavily on the quality and availability of the company’s records.
Where the information is readily available, matters can progress more quickly.
Where records are incomplete or the financial position is unclear, additional work may be required before the formal liquidation process can proceed.
Phase 2 – Formal Decisions and Liquidator Appointment
Once CVL is considered appropriate, the formal liquidation procedure begins.
Shareholders must approve the winding up, creditors are formally notified and the appointment of a licensed insolvency practitioner as liquidator is dealt with through the required procedures.
Creditors are given an opportunity to participate in the decision concerning the liquidator. Under the current Insolvency Rules, the creditor decision date concerning nomination of the liquidator falls within statutory parameters rather than every case following a single fixed “Day 14” appointment.
Once the liquidator is appointed, the directors cease controlling the company in the normal way.
For the procedure itself, see our full CVL process guide.
Phase 3 – The Early Stages of Liquidation
Once appointed, the liquidator begins taking control of the company’s affairs.
Early work may include:
- securing company records;
- identifying company assets;
- communicating with creditors;
- dealing with employees;
- taking control of bank accounts where appropriate;
- identifying outstanding invoices;
- reviewing the company’s financial position;
- gathering information from directors.
Directors are required to cooperate with the office-holder and provide relevant company information and paperwork.
For a straightforward company, this stage may progress relatively quickly.
More complicated businesses can require substantially more work.
Phase 4 – Assets, Creditor Claims and Investigations
This is often the stage where the timeline varies most significantly between companies.
The liquidator may need to sell or otherwise realise assets such as:
- stock;
- vehicles;
- equipment;
- property;
- intellectual property;
- outstanding invoices;
- other money owed to the company.
Creditors also submit claims for the amounts they are owed.
At the same time, the liquidator reviews the company’s affairs and director conduct.
This does not mean directors are automatically suspected of wrongdoing. Conduct reporting is a normal part of insolvent liquidation.
Issues such as disputed assets, director loan accounts, legal claims or complex transactions can significantly increase the amount of time required.
Phase 5 – Final Reporting and Dissolution
Once the liquidator has completed the substantive work, the liquidation can move towards closure.
This may involve:
- finalising creditor claims;
- completing asset realisations;
- making distributions where funds are available;
- resolving outstanding investigations;
- completing reports;
- submitting the necessary filings;
- closing the liquidation.
The company is then eventually dissolved and removed from the Companies House register.
This is why it is important to distinguish between entering CVL and the company being finally dissolved.
The first can happen comparatively quickly.
The second can take considerably longer.
What Can Make a CVL Take Longer?
Several factors can extend the duration of a Creditors’ Voluntary Liquidation.
Property or Difficult-to-Sell Assets
Property, specialist machinery or unusual assets may take longer to value and sell than straightforward items such as cash or standard equipment.
Large Numbers of Creditors
More creditors can mean additional claims, correspondence and administration.
Incomplete Company Records
Missing accounts, bank records or transaction information can slow down the liquidator’s work.
Directors have a duty to cooperate with the office-holder and provide relevant company information.
HMRC and Tax Matters
Outstanding VAT, PAYE, Corporation Tax or unresolved tax matters can sometimes need to be clarified before the liquidation can be completed.
Overdrawn Director’s Loan Accounts
If a director owes money to the company, the liquidator may need to investigate and seek repayment of the balance.
Our guide to director’s loan accounts explains this in more detail.
Legal Disputes
Existing litigation or potential claims against another party can substantially extend a liquidation.
Director Conduct or Transaction Investigations
Transactions before liquidation may require further examination, particularly where company assets, connected parties or creditor interests are involved.
For more information about the director implications, read what happens to a director when a company goes into liquidation.
Can a CVL Be Completed Quickly?
Potentially.
A straightforward CVL involving:
- few assets;
- complete company records;
- relatively few creditors;
- no major disputes;
- no significant outstanding debt recovery;
- no complex investigations;
may be completed substantially sooner than a complicated liquidation.
However, directors should not confuse the speed at which the company enters liquidation with the amount of time required to finish the entire CVL.
The liquidator must complete the work required by the circumstances of the company before the liquidation can close.
Does a Company Continue Trading During a CVL?
CVL is normally used where an insolvent company is being closed rather than rescued as a going concern.
In many cases the business will therefore have stopped trading by the time the liquidator is appointed.
There can be circumstances where limited activity continues for a short period where this is considered appropriate as part of dealing with the company’s affairs.
If the underlying business remains viable and the objective is to rescue it rather than close it, another insolvency or restructuring option may be more appropriate.
How Long Do Employees Have to Wait in a CVL?
Employees are commonly made redundant when an insolvent business stops trading.
Their statutory claims are separate from the time required to complete the entire liquidation, so employees do not normally have to wait until the company is finally dissolved before making eligible claims.
For more detail, see our guide to what happens to employees when a company goes into liquidation.
Does a CVL Take Longer if the Company Has No Assets?
Not necessarily.
A company with few or no assets may have less asset-realisation work for the liquidator to complete.
However, other factors can still affect the timeline, including:
- creditor claims;
- incomplete records;
- director loan accounts;
- investigations;
- outstanding tax matters;
- disputes.
The amount of assets is therefore only one factor determining how long a liquidation takes.
Is the CVL Process Faster Than Compulsory Liquidation?
The procedures are different, so there is no universal answer.
A CVL allows directors to address the company’s insolvency proactively rather than waiting for a creditor to pursue a winding-up order through the court.
If creditor action is already escalating, taking advice early may provide more options than waiting for compulsory liquidation.
See our guide to CVL vs compulsory liquidation for a full comparison.
How Does the CVL Timeline Compare With Other Types of Liquidation?
This page deals specifically with the timeline for a Creditors’ Voluntary Liquidation.
Other liquidation procedures have different requirements and timescales.
For a broader comparison, read our guide to how long it takes to liquidate a company.
Frequently Asked Questions About the CVL Timeline
How long does it take to start a CVL?
There is no single fixed timeframe. The initial process can often progress relatively quickly once the necessary company information has been gathered and the formal decisions can be made.
Is a CVL completed as soon as the liquidator is appointed?
No.
The appointment of the liquidator is near the beginning of the liquidation, not the end. The liquidator must then deal with company assets, creditor claims, investigations and other outstanding matters.
Does every CVL take the same amount of time?
No.
The duration depends on the circumstances of the company. A straightforward company with few assets and creditors will usually be easier to deal with than one involving property, litigation, complex transactions or investigations.
Why is my CVL taking so long?
Common reasons include difficult-to-sell assets, outstanding invoices, disputed creditor claims, tax matters, director loan accounts, incomplete records, legal disputes and investigations.
Your liquidator should be able to explain which outstanding matters are preventing the liquidation from being completed.
Can directors speed up a CVL?
Directors can help avoid unnecessary delays by providing complete records, responding promptly to requests from the liquidator and cooperating throughout the process. Directors are formally required to cooperate with the office-holder.
When does the company disappear from Companies House?
The company remains on the register while the liquidation is ongoing. It is ultimately dissolved after the liquidation has been completed and the required closure process has taken place.
Does a CVL always take 12 to 24 months?
No.
There is no universal 12-to-24-month timescale that applies to every CVL. Straightforward cases may complete sooner, while complicated liquidations can continue for longer.
Get Advice About the CVL Timeline
If your company is struggling to pay HMRC, suppliers, lenders or other creditors, you may understandably want to know how quickly the situation can be resolved.
The first step is to establish whether CVL is actually the right option.
Business Helpline can help you understand:
- whether your company is insolvent;
- whether rescue remains realistic;
- how quickly a CVL could potentially begin;
- what information will be required;
- what could affect the liquidation timeline;
- how the process could affect directors and employees;
- the alternatives available before liquidation.
Contact Business Helpline for a free and confidential discussion about your company’s position.
