A creditors’ voluntary liquidation (CVL) is a quick and powerful way to close a business and deal with things legally and properly.
If a company is insolvent, it is a director’s duty to cease trading and seek expert advice about the best way forward, whether that is rescuing the business and turning things around or closing the company for good. If your business is facing financial difficulty and has no viable future, a creditors’ voluntary liquidation enables you to close the doors, deal with the debts, and move on with your life.
Once the process has begun, a CVL is fairly straightforward: creditors will be dealt with, leases are cancelled, and no loose ends are left untied. If you would like to find out more about the creditors’ voluntary liquidation process or if you need pre-liquidation planning and support, our team can help with everything from asset protection and directors’ liabilities to staff redundancy.
How does a CVL work?
With a creditors’ voluntary liquidation, the company must pass a special resolution under the Companies Act 2006 declaring it is unable to continue due to its debts and liabilities. Using the method of Deemed consent the day of liquidation will come and go, and providing there is no objection to the proposed liquidator being appointed the company will enter liquidation.
Alternatively, a meeting with the company’s creditors will then take place within 14 days where the businesses finances will be reviewed, and a liquidator will be appointed. Neither the Court or Official Receiver are part of voluntary liquidation, and the process is quicker than a compulsory liquidation too because there is no need for creditors to apply for a winding up petition.
How much does a CVL cost?
It’s a common misconception that if a company is being liquidated, the director will have to pay for the fees out of their own pocket. However, if it is caught at an early stage, insolvency can often be paid for through company assets which means that the directors will not have to pay for the liquidation.
At McAlister & Co, we will always aim to make a company liquidation self-funding and our professional and impartial advice will always aim to show directors the cheapest way to close a limited company. Our team are experts in insolvency and will always advise on the best solution – it could be as simple as filing a form at Companies House and paying a £10 fee!
What are the advantages of a CVL?
There are a number of advantages to entering into a CVL. For starters, entering into voluntary liquidation is seen as a positive for creditors because it shows them that you are putting their interests first. They also know they will receive at least some repayment through the sale of business assets.
With a CVL, you will also have more control, and because a CVL involves less urgency, directors are able to carry out their duties properly and carefully in line with the Insolvency Act 1986. Finally, a CVL is also much faster than a compulsory liquidation, taking just two to three weeks to facilitate the initial meeting of creditors.
How McAlister & Co can help
With over 20 years of experience, McAlister & Co are one of the most in-demand licensed insolvency practitioners in the country. We provide expert advice on CVLs and business insolvency to directors, sole traders and partnerships about the variety of different options available and can help to:
- Deal with staff and unpaid wages
- Deal with your creditors
- Liaise with bailiffs, solicitors and court officials
- Safely close a company and restart
- Give you breathing space to make informed choices
- Obtain a valuation of business assets
- Assist in gaining business finance
- Protect your family home and personal assets
- Negotiate with HMRC on your behalf
Times of financial uncertainty can be stressful, but with McAlister & Co, you don’t have to face financial difficulty alone. Call us now on 03300 563 600 or contact us here for free initial advice on creditors’ voluntary liquidations. Rest assured, we don’t need personal or company detail to answer initial questions, and all our advice is completely confidential.