Creditors Voluntary Liquidation (CVL) is a quick and powerful way to close a business, dealing with things legally and properly. Directors can get on with a new business, the doors closed, debts dealt with & leases cancelled.
If a company is insolvent, it is unable to pay its creditors when due and/or has simply run out of cash, it is a director’s duty to cease trading and seek advice about options to preserve the business or to instigate procedures to close the company and distribute its assets. If the company has no viable future then a CVL is straight forward once the process has begun. If you believe a CVL may be right for you, Contact Us.
If carried out correctly, and at the earliest warning signs, many directors do not have to pay to liquidate a limited company.
McAlister & Co will always aim to make a company liquidation self-funding.
A common misconception is that if a company is being liquidated by the court, or being liquidated voluntarily, a director will have to pay out of their own pocket to meet the fees. If caught at an early stage, insolvency can often be paid for through company assets.
Our professional and impartial advice will always aim to show directors the cheapest way to liquidate a limited company. Our staff are experts in corporate insolvency and with their combined knowledge of over 100 years, McAlister & Co will always advise on the best solution. It may be as simple as filing a form at companies house and paying a £10 fee.
An example is the most common mistake we encounter; Directors paying staff their final wages out of their own pocket. If there is not enough capital in the company, unpaid wages and redundancy payments are paid for by the Government. McAlister & Co will always advise and help any employees that require assistance with this process.
If your company is insolvent i.e typically unable to pay creditors when due or it has simply run out of cash, it is a directors legal obligation to cease trading and seek advice about options to preserve or close the business.
Our fees start at around £3,000, which will usually be taken directly from the business and not directors, each situation is different, but we will always be able to give you a fixed quote over the phone or due to our national offices we are happy to arrange an informal meeting at your convenience.
All insolvencies are impacted by when directors act, if you need help, contact us.
What happens during a Creditors Voluntary Liquidation (CVL)?
A meeting of creditors must be held within 14 days of the shareholders meeting (it is normally held on the same day) at a venue convenient for the majority of creditors. Notice of the creditors’ meeting will be sent to all known creditors at Least 7 days before the meeting, which will also be advertised publicly. Creditors are entitled to inspect a list of names and addresses of the company’s creditors prior to the meeting.
One or more of the directors will swear a Statement of Affairs of the company, which summarises the assets and liabilities (including details of creditors’ claims) at a date not more than 14 days prior to the date of liquidation. Copies or a summary of the Statement of Affairs will be made available to creditors at the meeting.
The insolvency practitioner whom the shareholders nominated as liquidator will assist the chairman of the meeting, who must be a director. A report of the company’s history up to liquidation will be presented, giving an explanation of the reasons for the insolvency, and creditors will be invited to question the directors.
The creditors then vote to appoint a liquidator. The votes are based on the values of creditors’ claims. To be entitled to vote, creditors (other than those present in a personal capacity) must have lodged a form of proxy by the time and at the place stated in the notice of the meeting. Statements of claim may be lodged at any time before voting
Should the creditors’ choice of liquidator be different from that of the shareholders, the creditors’ choice prevails. A report of the meeting of creditors will be sent to all known creditors within 28 days. This is why it’s called Creditors Voluntary Liquidation. It’s very common, quick and a very powerful way to close a business and deal with things properly. You can get on with a new business or job, the company is closed, leases cancelled and all the staff made redundant.
SUMMARY:
If the business has no future and very little cash, debtors or small asset values, get it into liquidation BEFORE it runs out of cash and assets to pay for the liquidation. This is the common failing of many directors, they think something will turn up and fail to act soon enough. Their business ends up with no assets and the company ends up facing a WINDING UP PETITION. This can be more risky for the directors than voluntary liquidation.
All insolvencies are impacted by when directors act, if you need help, contact us.
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He or she “runs” the liquidation, fills out all the forms, calls all meetings and investigates the conduct of the directors before the liquidation happened. He collects assets and turns them into cash. He then works out the debts and pays the creditors from the assets, if there were any. This is called paying a dividend to creditors. Often the dividend is very little or zero.
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Once the company is “in liquidation” the directors have to fill out a detailed questionnaire for the liquidator. They MUST provide all of the company’s books and records to the liquidator. After this there is a creditors’ meeting which a director must attend. After that, very little else is required. You must comply with the liquidators’ request for information; it is a criminal offence not to do so.
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This is a very common question and we would always advise that directors should take great care. You must not trade with a similar name as the previously liquidated company without careful legal advice. Breaching s216 Insolvency Act 1986 is a possible criminal offence. We can guide you through this possible minefield.
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[su_spoiler title=”Can I become a director of another company if my company is liquidated?”]
Yes! Don’t worry, you can be a director of another company (remember s216 above). But always act properly, don’t take chances and think you are a smarter than the law. You aren’t, lots of people think they are and end up in personal financial trouble. Call us now, ask all the questions you want for free.
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