Creditors’ Voluntary Liquidation
Creditors’ Voluntary Liquidation or CVL is initiated by one or more of the company’s directors. A board of directors meeting takes place at which the shareholders are advised by the directors that in their opinion the company is insolvent, should cease trading and must be wound up. The role of a Liquidator is to realise the company assets and make any necessary investigations into the company affairs. If there are sufficient assets available then he will make a distribution to creditors.
Our agents will work closely with you to establish the value of the company assets. If you are planning to set up a new company and feel the company 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.
Once the position regarding the company’s assets has been determined we will arrange for all the necessary paperwork to be completed and convene a meeting of shareholders and creditors to put the company into Liquidation and determine the appointment of a Liquidator. Anthony Fisher of this office is a Licensed Insolvency Practitioner and will be the proposed Liquidator however ultimately the appointment decision lies with company creditors (hence the nameCreditor’s Voluntary Liquidation).
If you have been experiencing pressure from creditors such as bailiff action or a winding up petition you can still put the company into Voluntary Liquidation. Once we have given notice of the meeting to creditors, any bailiff action against the company assets is void and therefore they tend to put all action on hold pending the appointment of a Liquidator.
If the company ceases trading and the employees are made redundant then we will give advice to all employees regarding making a claim in the Liquidation. There is a National Insurance Fund from which employees can be paid wages, holiday pay, pay in lieu and redundancy owed to them in preference to all other creditors regardless of the level of assets in the company.
The meeting itself will take place in a location convenient to the company creditors and will ordinarily only take an hour. The meeting will be orchestrated by Focus Insolvency Group however one director is required to personally attend the meeting. Creditors rarely attend the meeting of creditors as they usually decide on the appointment of a Liquidator by proxy. If they do decide to attend it will simply be to ask questions and raise any concerns with the Liquidator.
Once the company is in Liquidation, your role as a director ceases and your involvement from thereon is minimal. You will have to pass over any company books and records and complete a director’s questionnaire regarding your role within the company.
- Allows you to step away from the insolvent company with no further liability (unless debts have been personally guaranteed).
- A very quick, cost effective way of formally closing down a company and complying with your duties as a director.
- Can be funded using company assets such as cash at bank, sale of assets, book debts etc.
- It shows creditors you have done the right thing by taking professional advice and can steer you away from the implications of wrongful trading.
- Employees and potentially directors can make a claim from the National Insurance Fund and receive payments for outstanding wages, holiday pay, pay in lieu of notice and redundancy.
Creditors’ Voluntary Liquidation Case Studies
Peter, a director of a small building company approached Focus Insolvency Group with debts in excess of £170,000 mainly to HM Revenue and Customs. He had built up his company over a period of 5 years but the recent recession had hit hard and he was unable to maintain his payments to supplies and in particular the Corporation Tax/ VAT and PAYE that was due.
Peter now finds that he is unable to continue to support the company from his own funds and there are no funds left to pay the employees who were expecting payment the day after. Furthermore, bailiffs are knocking on the door demanding payments.
After an initial consultation with Focus Insolvency Group, it was evident that the company could not continue to trade at even a break-even point.
Restructuring of the company was not practical as the work just wasn’t there and there was a 5 year lease remaining on the trade premises at a huge cost of £2,000 per month from when times were good.
Therefore, advice was given by Focus Insolvency Group to cease trading immediately. Focus Insolvency Group assisted the director in the unenviable position of having to inform all staff of the redundancies and the doors were closed. Agents were employed to sell the company assets and the director found alternative employment.
Employees were delighted to learn that under the provisions of the Employment Rights Act 1996 they would receive their entitlement for wages, holiday pay, pay in lieu of notice and redundancy up to certain limits. The director was also able to make a claim! The bailiffs were stopped from taking assets and the Liquidator was appointed to deal with all creditor claims and assets of the company. The director had given no personal guarantees and as such the debts of the company including the leased property were dealt with by the Liquidator.
Take the next step
- Call us direct on 01257 257030 and ask to speak to a specialist in Creditors Voluntary Liquidation. You can see our biographies here and ask for someone direct if you like.
- We will discuss the company position: current trading, cash flow, assets, liabilities, creditor action and about your employees in clear terms you can understand.
- We will arrange a meeting to put a suitable measure in place to protect the company and your position.
- We will work out the best way to proceed taking all matters into consideration.
- You will be under the guidance of Licensed Insolvency Specialists, who act as officers of the court and trusted Professionals.
- If you just prefer some generic advice then sign up to our newsletter here and we will send you useful information and guidance on Insolvency and finance options without having to speak to anyone until you are ready.
Creditors’ Voluntary Liquidation Testimonials
Very efficient, information provided is straightforward and easy to understand, excellent help at such short notice
All my clients that I have referred to Focus Insolvency have received an unrivalled service which has exceeded my expectations and I can certainly confirm that Focus Insolvency live up to their excellent reputation
Take time for clients, Knowledgeable and patient
Anthony Fisher MIPA, FABRP, Gary Birchall MIPA, FABRP and Jane Hardy MIPA are licensed to act as Insolvency Practitioners in the UK by the Insolvency Practitioners Association. Focus Insolvency Group is a trading style of Debtfocus Business Recovery & Insolvency Limited.
Registered in England & Wales Company Number 6831646. VAT Number: 905 2306 58.