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What is a Creditors’ Voluntary Liquidation

CVL is a process to mark the end of a company’s life and ensures that those who are owed money receive as much as possible from the company’s assets in a fair way. It allows all those involved to move forward from what is usually a difficult situation.

If you are running a company and it becomes clear to you that it can’t pay its debts and is unlikely to be able to do so in the future, then the right thing to do is to stop the situation getting worse. Often the way to do this is to place the company into CVL which involves the following:

  • The company stops trading
  • An independent person is appointed to take control of the company. This person is a qualified insolvency practitioner who, when appointed, is known as the liquidator of the company
  • It is the liquidators job to sell/recover the company’s assets to pay back those who are owed money, known as creditors, and to check that the directors have acted reasonably, which is very often the case

At the end of the day it’s not always possible or sensible to try and save a company. CVL is a way to make sure a company’s closure is managed sensitively and properly.

What to do when your business is insolvent

Once you find that your company is insolvent, it is best to be pro-active and seek professional advice as soon as possible. Looking to sort the situation through a CVL removes unnecessary stress and frees up directors to move on to the next business venture. The alternative is to wait for a creditor to petition for a Compulsory Winding-Up, which can become awkward and considerably prolong the whole process.

What happens in a Creditors' Voluntary Liquidation

The following diagram provides an overview of the key steps involved in placing a company into CVL and the liquidators’ duties.

What happens in CVL flow chart

How we will take you through the CVL process

Quote and agree timetable

Once you have used our quick quote calculator and want to proceed, we will contact you to agree a timetable for placing your company into CVL. Key to this is agreeing a date for the formal winding-up of the company, upon which the CVL is commenced and we are appointed liquidators.


We will provide you with information on what you need to do whilst we wait for the CVL to commence and be on hand to deal with any questions you may have along the way.

Information and key documents

To place your company into CVL, we will need some specific information about the company’s situation. This is collected through a questionnaire that we will direct you to.

This information enables us to prepare on your behalf all the paperwork needed to place your company into CVL.

Advise key people

As soon as we have all key information and documents prepared we will write to all those who should be told about the proposed CVL. This includes directors, shareholders and creditors.

Communicate to those affected

An important part of the solution is to explain to those affected why the company needs to go into CVL. This is done with the help of a document that we prepare on the directors’ behalf, which gives them an opportunity to explain the background circumstances.

This is sent to the company’s shareholders and creditors prior to the formal winding-up date.

Liquidation starts

Up until now, our job is to assist you in all the steps involved in placing your company into CVL.

It is only once the shareholders have passed the required resolutions and creditors have had an oportunity to endorse the choice of liquidator that the company actually enters into CVL and that we are appointed as liquidators. From that point we take over responsibility for the company.

Our role as liquidator

Once appointed liquidator our job is to sell/recover the company’s assets (if any exist) to repay creditors, double check that the directors acted reasonably and thereafter dissolve the company.


A simple CVL can take about eight months. More complicated CVLs can take longer so there is no maximum time for one to be completed.

What are the advantages of a CVL?

It puts you in control

Whilst no one wants their business to fail, taking the positive step of getting professional advice will always put you and the business in a much better position. Because you are involved in the process, disruption is minimised, creditor losses are reduced and potentially more of the company assets can be sold.

It is a positive action

One of the duties of a liquidator in a CVL is to report any possible misconduct by the directors to The Insolvency Service. This can have an effect on your ability to start a company again in the future so taking positive action will show that you have taken appropriate steps to deal with the company’s insolvent position.

The CVL process also gives you the opportunity to put your side of the story to creditors explaining the company’s history and the reasons for its failure. This can help to address any concerns the creditors may have about the conduct of the directors as they can see the steps taken by the directors in the period leading to CVL.

It can make starting again more straight forward

In a CVL the insolvency practitioner can advise the directors on how they are able to purchase the company’s assets should they wish to start again.

It can deliver a better return for creditors

In a CVL, the value of assets sold is usually higher as the directors and appointed liquidator are actively involved in the process early on. Also, CVLs do not have the additional statutory charges imposed on other liquidation processes such as a Compulsory Liquidation. This can mean a better return for creditors.

It manages personal liability

A company can be placed into CVL in as little as 2-3 weeks, which minimises the opportunity for directors to make decisions (without the aid of professional advice) that could expose them to personal liability and/or creditor criticism.

Employees and directors may be able to claim from the Redundancy Payments Service

If a company goes into a formal insolvency process, like CVL, employees and directors may be able to claim various entitlements from the RPS if the company cannot afford to pay. These could include arrears of wages, notice pay, unpaid holiday and redundancy Read more…

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