Creditors voluntary liquidation

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Creditors' Voluntary Liquidation ​

What is it and when does your company need it?​

If your company can't pay its debts, Creditors Voluntary Liquidation (CVL) might be the responsible step to take. It's a process designed for businesses that are unable to meet financial obligations, allowing them to close down voluntarily under professional guidance. You'll work with a licensed specialist to settle debts as fairly as possible and dissolve the company, avoiding legal repercussions and providing peace of mind for you and your creditors.​

Find out now the best procedure for your company

Start your liquidation quote now!

Our reviews

John M. - Ltd Director
John M. - Ltd Director
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Working with the team from Insolvency Help was the best choice for me and my company. After one year, my company has been fully wound up and the debts wiped out.
Andrezj
Andrezj
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Very happy with the services! All documents were translated and explained in my own language.
Andrew Nell
Andrew Nell
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Worked with Michael - recommended me a CVL. Old company is dissolved and I managed to open a new one. Very happy with them!
Mahmood R.
Mahmood R.
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My kebab shop was closed down during the pandemic so I had to take out the Bounce Back Loan. Fortunately Insolvency Help managed to close down my company, with minimal costs.
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Benefits of a CVL

Personal Protection​

With CVL, directors typically won’t be held personally liable for business debts, safeguarding personal finances.​

Debt Forgiveness

Business debts are settled through the liquidation process, meaning directors can move forward without the weight of past financial obligations.

No Creditor Hassles

The appointed liquidator handles all communication with creditors, freeing directors from challenging conversations and negotiations.

Clean Slate

Directors have the opportunity to start anew, opening the door to new ventures without old debts looming.

Legal Compliance

Directors demonstrate responsible management by proactively addressing insolvency, maintaining their professional integrity.

How does it work?​

Step 1

Starting with
Expert Help​

When your company is in a tight spot financially and can't pay its debts, it's time to talk to an expert. This is where a Licensed Insolvency Practitioner (IP) comes in.

They're the pros who'll look over your finances with you and figure out the best path forward. If it turns out that wrapping up the company is the wisest choice, the directors will have a meeting to agree on starting the CVL process with the IP's help.

Step 2

Getting the
Paperwork Ready​

Next, the Insolvency Practitioner (IP) will work with you to put together two key documents: the Director's Report and the Statement of Affairs. Think of these as a full financial check-up; they list everything the company owns and owes.

It's a bit like gathering all your financial facts to give to the people your company owes money to. This step is all about transparency and setting the stage for what comes next.

Step 3

Agreeing to​
Liquidate

It's decision time. The shareholders come together to vote on whether to close the company through liquidation.

If most agree, the process moves forward. It's about making sure everyone's on the same page before taking the next step.

Step 4

Creditors
Weigh In​

Next up, the creditors get a say. They're informed about the liquidation plan and given a chance to share their thoughts.

If there are no major objections, and everything is clear, we move on to wrapping things up in a way that's fair for everyone involved.

Step 5

Liquidator’s Duties
during the Liquidation.​

Once the appointment of the liquidator is confirmed, the Directors’ powers cease. Upon appointment, the Liquidator has certain statutory duties, such as providing notice of their appointment to the creditors, London Gazette, Companies House.

The Liquidator will deal with all company assets, trying to maximise realisations to creditors.

Step 6

Liquidation ​
comes to a close

When all assets have been dealt with, the investigations into the company’s affairs are finalised and any other matters are concluded, the Liquidators will issue their final report to creditors on the liquidation.
This process ends with the dissolution of the company.

Step 1

Starting with
Expert Help​

When your company is in a tight spot financially and can't pay its debts, it's time to talk to an expert. This is where a Licensed Insolvency Practitioner (IP) comes in.

They're the pros who'll look over your finances with you and figure out the best path forward. If it turns out that wrapping up the company is the wisest choice, the directors will have a meeting to agree on starting the CVL process with the IP's help.

Step 2

Getting the
Paperwork Ready​

Next, the Insolvency Practitioner (IP) will work with you to put together two key documents: the Director's Report and the Statement of Affairs. Think of these as a full financial check-up; they list everything the company owns and owes.

It's a bit like gathering all your financial facts to give to the people your company owes money to. This step is all about transparency and setting the stage for what comes next.

Step 3

Agreeing to​
Liquidate

It's decision time. The shareholders come together to vote on whether to close the company through liquidation.

If most agree, the process moves forward. It's about making sure everyone's on the same page before taking the next step.

Step 4

Creditors
Weigh In​

Next up, the creditors get a say. They're informed about the liquidation plan and given a chance to share their thoughts. ​

If there are no major objections, and everything is clear, we move on to wrapping things up in a way that's fair for everyone involved.

Step 5

Liquidator’s Duties
during the Liquidation.​

Once the appointment of the liquidator is confirmed, the Directors’ powers cease. Upon appointment, the Liquidator has certain statutory duties, such as providing notice of their appointment to the creditors, London Gazette, Companies House.

The Liquidator will deal with all company assets, trying to maximise realisations to creditors.

Step 6

Liquidation ​
comes to a close

When all assets have been dealt with, the investigations into the company’s affairs are finalised and any other matters are concluded, the Liquidators will issue their final report to creditors on the liquidation.

How long does a CVL take?​

A Creditors’ Voluntary Liquidation’s duration can vary from a few months to a couple of years. It depends on the complexity of the case (number of creditors, number of employees to deal with, complexity of investigations into the company’s affairs, assets etc). In our experience the average length of a liquidation is around 1 year.

As for the director’s involvement, the bulk of it will be in the first couple of months of the liquidation.

important things you should know

Questions And Answers about a creditors’ voluntary liquidation (CVL)

You are insolvent if you cannot pay debts when they become due (either now or, because of some contingent liability of the business, in the future) or if your assets are worth less than your total liabilities.

There are three tests you can run to see if your company is solvent or insolvent.

  1. Cash Flow Test – A company should be able to pay it’s debt as they fall due. If this is not possible your company may be insolvent.

  2. Balance Sheet Test – If your companies liabilities (Creditors, Loans, Debts) exceed your company assets this means your company is likely to be insolvent.

  3. Legal actions against your company – A major warning sign that your company is insolvent is receiving any letters threatening with legal actions against your company, from creditors. Such legal documents may be: Winding Up Petitions an CCJ – County Court Judgement.

In reality there are three main options you have in front of you

 

    1. Pay the entire debt. This can prove to be quite difficult if you are already facing financial difficulties.

 

    1. Do nothing – this is the worst option possible. Most likely a creditor will issue a winding up petition, and your company will enter compulsory liquidation. This is quite an unpleasant process, as an Official Receiver (Court Representative) will liquidate your company.

 

  1. Enter a voluntary Insolvency Procedure such as CVL, Admin, CVA.

The main Insolvency Procedures are:

    1. Creditors’ Voluntary Liquidation (CVL) – an easy way to close down the company without having to pay all the outstanding debts

 

    1. Administration – a way to rescue the business by finding an external investor

 

  1. Company Voluntary Agreement (CVA) – An agreement with the creditors aimed to reduce the total amount owed and to extend the timeline of the repayment

A company can be easily placed into liquidation. The first step is to have a discussion with a Licensed Insolvency Practitioner and determine a course of action. If Liquidation is the best route, the process can be started immediately. The steps for placing a company in liquidation are the following: 

  1. Prepare the statement of affairs (SOA) – a document presenting the clear situation of your company, the level of debt, all the creditors, the assets level of the company and the history of your company. 

  2. Board meeting – Directors of the Company meet and decide to place the company in liquidation

  3. Members Meeting – The Shareholders also decide that the company should be placed into liquidation

  4. Creditors meeting – the creditors meet and agree that the company should be placed in liquidation

For more details regarding company liquidation click here.

A Creditors’ Voluntary Liquidation usually costs around £6,000 + VAT. The price can vary depending on the total amount of debts and the number of creditors. 

An Administration ranges from £7,500 to £10,000, depending on the size of the business and the total amount of debts.

In a creditors voluntary liquidation the cost to place the company into liquidation may be paid from assets if sufficient.

Liquidators fees post appointment can only be drawn from asset recoveries.

The benefit of a limited company provides the director with protection against company debts.

However please contact one of our insolvency practitioners if you have signed a Personal Guarantee over a debt of the company.

The liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State for Business, Enterprise and Regulatory Reform, a report on the conduct of all directors who were in office in the last 3 years of the company’s trading. The Secretary of State has to decide whether it is in the public interest to seek a disqualification order against a director.

Examples of the most commonly reported conduct are:

  • Continuing the company’s trading when the company was insolvent;

  • Failing to keep proper accounting records;

  • Failing to prepare and file accounts or make returns to Companies House; and

  • Failing to send in returns or pay to the Crown any tax that is due.

Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time.

There are few instances where the Directors are liable such as wrongful trading.

Each insolvency case is different and the only way to know for sure is to speak directly with a Licensed Insolvency Practitioner.

Get in touch with one of our team members now.

Yes, it is possible for a director to set up a new company although there may be some restrictions put in place by HM Revenue & Customs

Before making any decision, a director has to consult with a Licensed Insolvency Practitioner. Our team can arrange a free consultation with some of the best professionals in the industry.

Directors’ duties cease at the date of liquidation, although the director’s full ongoing co-operation and assistance is required by the Liquidator. The company’s directors must:

• Give the Liquidator information about the company’s affairs
• Provide details of its assets and liabilities
• Preserve and hand over the company’s assets to the Liquidator; and
• Preserve and hand over the company’s books, records, bank statements, insurance policies and other papers relating to its assets and liabilities.

Get in touch with us
Today for a free consultation!

Feel free to either reach us directly via phone or email or submit a consultation form, detailing your situation and one of our team members will get back to you as promptly as possible.
As for the director’s involvement, the bulk of it will be in the first couple of months of the liquidation.

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