Creditors Voluntary Liquidation (CVL)

The CVL procedure is the most popular mechanism for closing down and winding-up a company that is insolvent and is unable to meet its liabilities as and when they fall due. The procedure is used where a rescue in not viable.

A director can initiate a Creditors’ Voluntary Liquidation and together with shareholders nominate an Insolvency Practitioner to wind up the insolvent company. Creditors will formally make the appointment at a meeting of creditors, usually held within 2-4 weeks of seeking advice. This means the company will stop trading and be liquidated (‘wound up’).

You must call a meeting of shareholders and ask them to vote; 75% (by value of shares) of shareholders must agree to the winding-up to pass a ‘winding-up resolution’. Once the resolution is passed, they will appoint an authorised Insolvency Practitioner as liquidator to take charge of liquidating the company. Saud & Co. will help through all the steps of this procedure.

A creditors’ meeting must be held within 14 days of the winding-up resolution being passed. You must present a Statement of Affairs at the meeting. This gives details of the company’s situation and assets. The creditors will have to confirm the Appointment of the Insolvency Practitioner nominated by the shareholders or nominate alternative.

The Liquidator must be a licensed Insolvency Practitioner, who as soon as he is appointed will take control of the business. The Liquidator will dispose of all company assets and share the proceeds with creditors in accordance with their adjudicated claims and priorities. In a Creditors’ Voluntary Liquidation, the Liquidator acts in the interest of the creditors not the directors

When a Liquidator is appointed, directors no longer have control of the company or anything it owns; they can’t act for or on behalf of the company. If you’re a director you must give the Liquidator any information about the company they ask for.

The Liquidator will interview the directors and report on what went wrong in the business and on the conduct of the directors in relation to the demise of the company. Directors must be mindful at all times that if their company is struggling, they should not continue to trade whilst knowingly insolvent, unless they are very confident that the company’s fortunes will change. They can be banned from being a director for 2 to 15 years or prosecuted if the Liquidator decides your conduct was unfit.

Saud & Co will work with you in the preparation of the company’s Statement of Affairs and with the report to be presented to the creditors outlining the company’s position. We will take you over all your options, your responsibilities, duties and the consequences of the Creditors Voluntary Liquidation procedure.

Saud & Co, Registered office: 21 Highfield Road, Dartford, Kent DA1 2JS
Tel 0208 304 0609 - Fax 0700 608 8816
Saud & Co is a trading name of Saud & Company Limited.
Company Registration Number 08402929 – VAT registration 726 1719 34
Authorised by the Insolvency Practitioners Association to act as Licensed Insolvency Practitioners in the UK