When Is a CVL the Best Option?
In this video, we explain when a Creditors Voluntary Liquidation may be the best option for directors of a limited company.
A CVL is usually considered when a company is insolvent, cannot pay its debts as they fall due, and does not have a realistic route back to profitability.
For directors, the decision to place a company into liquidation is never easy. However, acting at the right time can help bring creditor pressure under control, close the company in an orderly way, and reduce the risk of the situation worsening.
If your company is struggling with debt, HMRC arrears, unpaid suppliers or ongoing cash flow issues, it is important to take advice early.
When might a CVL be the right option?
A Creditors Voluntary Liquidation may be the right option where a company is no longer viable and cannot continue trading without worsening its financial position.
This may include situations where the company is facing creditor pressure, HMRC arrears, legal threats, unpaid suppliers, wage difficulties or ongoing cash flow problems.
A CVL is not always the only option. In some cases, rescue or restructuring options may still be available. However, where there is no realistic prospect of recovery, a CVL can provide a formal and controlled way to close the company.
The right decision will depend on the company’s assets, liabilities, creditor position, cash flow and future viability.
Read the full CVL guide
For more detailed guidance, read our full Creditors Voluntary Liquidation guide. It explains how the process works, when it may be appropriate, what directors should expect, and what happens after liquidation.
