Expert, Empathetic Support for Company Directors Facing Insolvency
If your company is no longer able to pay its debts and the future looks uncertain, it can be difficult to know what to do next. At McAlister & Co, we understand how overwhelming financial difficulty can feel – but we’re here to offer clear, expert advice and practical support.
Read on to discover specialist creditors’ voluntary liquidation advice, from our team of insolvency experts, including what a CVL is, when it may be the right solution, the process involved, and how McAlister & Co can help you every step of the way.
What Is a Creditors’ Voluntary Liquidation?
A creditors’ voluntary liquidation (CVL) is a formal insolvency process used when a company is insolvent – meaning it cannot pay its debts as they fall due – and there is no viable route to recovery.
It is a formal insolvency procedure designed to wind up the affairs of an insolvent company in an orderly and transparent way.
Unlike compulsory liquidation, which is forced upon a company by creditors, a CVL is initiated voluntarily by the company’s directors and shareholders. It enables an orderly winding up of the company’s affairs, including:
- Ceasing trade and closing the business
- Realising assets to repay creditors
- Investigating the conduct of directors
- Dissolving the company
The process must be handled by a licensed insolvency practitioner, who is appointed as liquidator to oversee the winding-up and ensure creditors’ interests are protected.
When Is a CVL the Right Solution?
A CVL may be appropriate if:
- Your company has unmanageable debts and no realistic prospect of recovery
- You are unable to meet your liabilities, including payroll, rent, HMRC payments, or supplier invoices
- Creditors are threatening legal action or have already issued a winding-up petition
- Attempts at rescue (such as refinancing, a CVA, or administration) are no longer viable
The decision to enter a CVL should never be rushed. However, acting early can often protect directors from greater personal liability and may even improve outcomes for creditors. By acting early, directors can protect themselves from personal liability and limit creditor losses.
Important: Continuing to trade while knowingly insolvent can lead to accusations of wrongful trading. Seeking professional advice early can help you stay on the right side of the law.
Key Benefits of a Creditors’ Voluntary Liquidation
While the word liquidation can sound final and frightening, in actual fact, a CVL offers several advantages compared to allowing a company to be forcibly wound up:
1. Director Control
By opting for a CVL, directors retain more control over the timing and appointment of the liquidator than in a compulsory liquidation. A CVL allows directors to take a proactive role in closing the business, which often results in a faster, smoother process compared to compulsory liquidation.
2. Reduces Director Risk
Directors have a legal obligation to act in the best interests of creditors once insolvency is identified – and a CVL shows you are doing just that. Initiating a CVL shows you’ve taken responsible action, helping protect against personal liability, disqualification, or other legal consequences.
3. Halts Legal Action and Creditor Pressure
Another benefit of entering a CVL is that it immediately stops legal proceedings, debt recovery efforts, and bailiff enforcement – giving you space to focus on winding up the business properly.
This relieves pressure and helps avoid court proceedings and bailiff intervention. Plus, a CVL also protects directors from wrongful trading accusations provided they act promptly and responsibly once insolvency is identified.
4. Professional Oversight by a Licensed Insolvency Practitioner
A CVL is conducted by a qualified insolvency practitioner who manages the entire process. The appointed liquidator will therefore ensure the process is managed transparently and fairly, with assets realised and distributed according to statutory rules.
5. Employees Can Access Government Support
Another benefit of a creditors’ voluntary liquidation is that employees can access government support. Although staff contracts are terminated, employees (and some directors) can claim redundancy, notice pay, and arrears through the Redundancy Payments Service (RPS).
6. Unsecured Debts Are Written Off
Once the liquidation is complete and the company is dissolved, any remaining unpaid debts are written off – unless personally guaranteed. This can provide huge relief for directors, taking the pressure off and enabling you to focus clearly on your next steps.
7. Opportunities for Business Continuity
In some cases, directors may legally purchase the company’s assets via a new business – enabling the core business to continue under a new structure, free from historic debt.
In some cases, directors may legally purchase the company’s assets via a new business – enabling the core business to continue under a new structure, free from historic debt.
The Creditors’ Voluntary Liquidation Process
At McAlister & Co, we pride ourselves on providing clear, jargon-free creditors’ voluntary liquidation advice, and also ensure that every step of the CVL process is clearly explained and expertly managed. Here’s what you can expect:
Step 1: Free, Confidential Consultation
We’ll begin with a no-obligation consultation to review your company’s financial position and discuss all the possible options, including business rescue where appropriate. If a CVL is the most suitable route, we’ll explain everything clearly so you can make an informed decision.
Step 2: Board Resolution
If a CVL is the right route and the directors agree to proceed, they pass a formal resolution to begin the liquidation process and call meetings of shareholders and creditors to propose the appointment of a licensed insolvency practitioner.
Step 3: Shareholder Meeting
Shareholders vote to confirm the company’s closure and appointment of the liquidator. A 75% majority (by shareholding) is needed to proceed.
Step 4: Creditor Engagement
A statement of affairs is provided to creditors, who vote on confirming the liquidator. Creditors may also form a committee to oversee progress. Creditors are notified and provided with:
- A Statement of Affairs outlining assets and liabilities
- A list of creditors
- Details of the proposed liquidator
At this stage in the process, the creditors can also vote to approve or replace the nominated IP. They may also choose to form a Creditors’ Committee to oversee the liquidation.
Step 5: Asset Realisation
The liquidator will then take control of the company and begin selling assets, collecting debts, investigating company affairs, and terminating contracts. The assets they sell may include stock, vehicles, intellectual property, or business premises.
Step 6: Creditor Distribution
Any realised funds are distributed to creditors in the statutory order of priority, including secured, preferential (e.g. employee claims), and unsecured creditors. Creditors submit claims, which the liquidator reviews and verifies, and the funds raised are then distributed based on legal priority:
- Secured creditors (e.g. asset-backed lenders)
- Preferential creditors (e.g. employees)
- Unsecured creditors (e.g. suppliers, HMRC)
Step 7: Investigation & Reporting
The liquidator reports on the directors’ conduct to the Insolvency Service. If misconduct is found, this may lead to disqualification or legal action.
The liquidator then submits a report on director conduct to the Insolvency Service. If misconduct is found, this may lead to disqualification or legal action. However, if directors have acted lawfully and sought advice early, no action is usually taken.
Step 8: Closure
After all matters are finalised, the company is struck off the Companies House register and officially ceases to exist.
Director Responsibilities During a CVL
One of the things we are asked about the most with regards to CVLs is the question of director responsibilities.
If you’re a company director, it’s essential to understand your duties when facing insolvency, because from the moment you suspect your company cannot pay its debts, your obligations shift from shareholders to creditors.
This means that you must:
- Avoid taking on further credit you know the company can’t repay
- Preserve company assets and records
- Seek immediate professional advice
- Not prefer certain creditors over others (e.g. repaying family loans first)
- Cooperate fully with the appointed liquidator
Failing to comply could result in personal liability, including disqualification or claims for wrongful or fraudulent trading.
What Happens to Employees in a CVL?
All employment contracts are automatically terminated on liquidation. However, employees may be entitled to claim redundancy pay, notice pay, arrears of wages and holiday pay.
These claims are usually met by the government’s Redundancy Payments Service (RPS), subject to statutory limits. Any unpaid balances become claims in the liquidation.
With years of experience in providing creditors’ voluntary liquidation advice, our team can help guide employees through this process, ensuring they access the support they’re entitled to.
How McAlister & Co Can Help
At McAlister & Co, we specialise in helping business owners navigate insolvency with dignity and clarity.
We offer:
- Free, No-Obligation Consultation – We’ll listen to your concerns, assess your situation, and talk through your options without pressure or judgement.
- Licensed Insolvency Practitioners – All CVL work is carried out by experienced, regulated professionals who understand the legal and practical aspects of liquidation.
- Honest, Empathetic Advice – We’re here to support, not judge. Many directors who choose a CVL feel immense relief afterwards, knowing they’ve done the right thing.
- Transparent Costs – We’ll explain the likely costs of the CVL process upfront, often allowing them to be covered from company assets or director contributions where necessary.
- Support for Restarting – If there’s scope to buy back the business or assets through a new company, we’ll help you explore this legally and ethically.
- Help With Personal Guarantees & Liability – We’ll explain what impact the liquidation may have on any personal guarantees or director liabilities – and work with you to manage the fallout.
Why Choose McAlister & Co for Creditors’ Voluntary Liquidation Advice?
At McAlister & Co, we’re more than just insolvency experts – we’re here to help you move forward. With decades of experience, we’ve helped thousands of UK businesses through insolvency with compassion and clarity, and have a strong reputation built on integrity, transparency, and results.
You can also count on us to break down complex processes into plain English. Plus, we always provide holistic, bespoke support. From CVLs to business rescue and turnaround strategies, you can rest assured that we tailor our advice to what’s best for you – not just the process.
Talk to McAlister & Co Today for Expert Creditors’ Voluntary Liquidation Advice
Choosing a CVL is a big step, but it could be the first move toward a fresh start. If you’re struggling with mounting debt, creditor pressure, or cash flow problems, don’t delay. Even if liquidation turns out not to be the right option, early advice gives you the best chance of protecting your business and yourself.
If your company is in financial trouble and you need creditors’ voluntary liquidation advice, don’t face it alone. Contact McAlister & Co today for a free, confidential consultation with one of our licensed insolvency practitioners.
Creditors’ Voluntary Liquidation FAQs
What’s the difference between a CVL and compulsory liquidation?
A creditors’ voluntary liquidation (CVL) is initiated by a company’s directors and shareholders, allowing them to choose the timing and appoint an insolvency practitioner of their choice.
Compulsory liquidation is forced through the courts – usually after a creditor has petitioned for the company’s winding up. It’s generally more stressful, costly, and damaging to the directors’ reputations.
Can I start a new company after a CVL?
Yes, you can legally start a new company – even one in the same industry. In some cases, you may be able to buy assets from the liquidated company to restart your operations.
However, there are strict rules about phoenix companies and using the same or similar names. We’ll guide you through this carefully to avoid legal issues.
Will I be personally liable for the company’s debts?
Generally, no – unless you’ve provided personal guarantees (common with bank loans, lease agreements, or supplier accounts). If so, you’ll still be liable for those specific debts.
However, entering a CVL helps reduce the risk of further personal exposure, such as wrongful trading or director disqualification.
What happens to directors in a CVL?
As a director, your duties change once your company is insolvent. By initiating a CVL, you’re demonstrating responsible conduct.
The appointed liquidator must report on your actions to the Insolvency Service, but most directors who act appropriately face no penalties.
What is a Statement of Affairs?
A Statement of Affairs is a document that sets out the company’s assets and liabilities at the time of liquidation.
It’s prepared by the directors and provided to creditors. This document helps creditors understand the financial position and potential returns.
Do I need to inform my employees?
Yes, you should inform employees as soon as you’ve made the decision to liquidate.
However, we’ll help you manage the process professionally, including issuing redundancy notices and guiding staff through redundancy claims via the Redundancy Payments Service.
Can a CVL be stopped once it starts?
It’s very difficult to stop a CVL once the process has formally begun. That’s why it’s so important to seek advice early.
If your business is potentially viable, alternative rescue options like a company voluntary arrangement (CVA) or pre-pack administration may be more appropriate.
How long does the CVL process take?
Most CVLs take between 6 and 12 months, depending on the complexity of the company’s affairs, asset realisation, and creditor claims. McAlister & Co will keep you informed every step of the way with clear timelines and updates.
How much does a CVL cost?
The cost of a CVL varies based on the size and complexity of the company. In many cases, liquidation costs can be paid from company assets. We offer a clear, fixed-fee structure where possible, and we’ll always discuss costs transparently at the outset.
