Last week we brought you part one of our information on Creditor’s Voluntary Liquidation (CVL), this week we conclude with part 2 – the CVL process.
You can catch up with any of the blogs in our ‘options available to struggling limited companies’ series by clicking on the links at the end of this blog.

Liquidation Process

Stage 1: Advice and Decisions
An insolvency advisor will help you explore your options. They will discuss the company’s financial position with you, review the company’s viability, financial forecasts and background and explain the various insolvency procedures, such as a voluntary liquidation (CVL), Company Voluntary Arrangement (CVA) or even administration and discuss which would be appropriate for your company.
All initial advice and guidance will be free of charge.

Stage 2: Creditors informed of CVL

Your insolvency practitioner will act as the advising member and proposed liquidator. At this stage all creditors and shareholders are written to and informed of your wishes to put the company into voluntary liquidation.

Stage 3: Creditors meeting

The insolvency practitioner writes to the creditors and shareholders informing them of a creditors meeting. The director(s) act as a chairman and the insolvency practitioner conducts the meeting. In most cases no creditors attend the meeting but if they do, questions may be asked over the cause of the company failure.
A statement of affairs that has been prepped by the insolvency practitioner with the help of the directors is given to creditors at the meeting. The creditors officially agree the appointment of the liquidator at this time. Your insolvency practitioner will be the proposed Liquidator however ultimately the appointment decision lies with company creditors (hence the name Creditor’s Voluntary Liquidation).

Stage 4: Liquidation and asset sale

The liquidation commences properly at this point. The assets of the company are sold, the outcome of this sale is reported to the creditors and if any value is left after the liquidation process, payment is made for settlement of the creditor’s claims.
Once the company is in liquidation, your role as a director would cease and your involvement from thereon would be minimal.  You will have to pass over any company books and records and complete a director’s questionnaire regarding your role within the company.

After CVL

After the company is liquidated you do still have the option of being a company director, there are however some strict rules around the reuse of a company name and restarting the same business. Professional advice should be sought in the case of a ‘Phoenix Company’.
If you are planning to set up a new company and feel the old company’s assets are of benefit to your new venture then you will be given the opportunity to make an offer for any assets providing it reflects the valuation figures.
Otherwise, you will be free of the company debt and able to move out without the burden.

What Next?

If you would like any help or advice with decisions on liquidation or any of the other insolvency and turnaround options we have covered in this series then remember that Focus Insolvency Group are here to offer you free and impartial guidance. Get in touch today.
Next week we will be gathering together everything we have discussed in our ‘options for struggling limited companies’ series so far so you can see all the choices in one place.
If you have any questions or feedback please get in touch.