Creditors Voluntary Liquidation
A Creditors Voluntary Liquidation (CVL) is a process for insolvent companies.
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What is a Creditors Voluntary Liquidation?
A Creditors Voluntary Liquidation is the process of closing an insolvent company. The Director of the company will engage a licensed Insolvency Practitioner to do this.
This is by far the most common way that directors choose to close their company as they have an element of control over the process and who they engage, plus they are doing the responsible duty as a director of the company.
How much does a Creditors Voluntary Liquidation cost?
Fees range from 3k – 6k for liquidations dependent on the firm and complexity (e.g. how many creditors you have). However, you need to be aware of some pitfalls as this fee is just to put the company into liquidation and there may be other fees once you enter the process.
Fees can come from the assets of the company. If there are no assets of the company then it would fall on the director to raise the funds. In some instances, the director will have a redundancy claim against the company (if they were on the payroll) – this can then be used to pay the liquidation fees as the claim is protected and is paid directly from the Redundancy Payments Service.
How long does a Creditors Voluntary Liquidation take?
The duration of a Creditors Voluntary Liquidation depends on the size of your company, its individual circumstances and how fast you can collate information.
Placing the company into a Creditors Voluntary Liquidation can take as little as 14 days. However, to complete the process you could be waiting between 6 to 24 months.
What happens in a Creditors Voluntary Liquidation?
All creditors are contacted and a liquidation date is set once all information is gathered from the director that make up a “Statement of Affairs”. The Insolvency Practitioner is appointed the Liquidator of the company, and their main duties are to realise any assets, report to the creditors of the company, and investigate the director and their conduct.
Frequently Asked Questions
What causes a Creditors Voluntary Liquidation?
There are various reasons you may put your company into a CVL, for example, your company is unable to repay its debts.
If you are worried about the financial health of your company, get in touch with our experienced team to assess all your options.
Get in touchThings to be aware of in a Creditors Voluntary Liquidation:
- The Liquidator represents the CREDITORS not YOU the director, so will look into the conduct and drawings from the directors etc.
- Overdrawn Directors Loans are ASSETS and the liquidator has a duty to call these in and pursue on behalf of creditors.
- DIVIDENDS may be classed as illegal if insufficient reserves were not there at the time, again these will be chased to pay back from the director.
- Payments made to creditors in the lead up to insolvency will be looked at to see if any were classed as preferential (i.e. the director decided to pay one creditor over another) – These can be pursued by the liquidator to pay back as they are deemed a preference payment.
- Some liquidators have varying experience in Directors Redundancy Claims, so best to speak to a specialist or independent who works with Insolvency Practitioners that allow you to defer the fees until the claim comes through.
- Make sure you do your research on the Insolvency Practitioner you engage OR go through an independent FREE company that has a panel of verified and trusted Insolvency Practitioners, so they can hold your hand through the process.
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We're here to offer free impartial opinion and guidance on the best recovery options for you and your business – not your creditors... Jonathan Cooper, Founder and Director