Members Voluntary Liquidation vs Creditors Voluntary Liquidation

When a company reaches the end of its journey, choosing the right type of liquidation process is essential. Two of the most common options are a Members Voluntary Liquidation (MVL) and a Creditors Voluntary Liquidation (CVL). While they may sound similar, the two processes serve very different purposes and are designed for businesses in entirely different financial situations.

In this guide, we break down the key differences between MVLs and CVLs, helping you understand which route may be more appropriate for your company’s circumstances.

What is a Members Voluntary Liquidation (MVL)?

A Members Voluntary Liquidation is a formal procedure used to close a solvent company—meaning it can pay its debts in full within 12 months. It is often the most tax-efficient method of closing a company that is no longer needed, for example, after a company restructure, business sale, or retirement.

The process is director-led and initiated by a declaration of solvency. You can read more in our dedicated article: What is Members Voluntary Liquidation?

If you already know this is the right route for your company, you can learn more about our Members Voluntary Liquidation service: What is a Members Voluntary Liquidation (MVL)?

What is a Creditors Voluntary Liquidation (CVL)?

A Creditors Voluntary Liquidation, on the other hand, is the process for closing a financially distressed or insolvent company—one that cannot pay its debts as they fall due.

CVLs are often initiated when directors conclude that there's no reasonable prospect of the business recovering. This process allows directors to take proactive steps, reduce legal risk, and work with creditors in an orderly, transparent way.

For a more detailed explanation, visit our blog: What is Creditors Voluntary Liquidation?

Or explore our Creditors Voluntary Liquidation service: What is a Creditors Voluntary Liquidation?

Key Differences at a Glance

Which One Is Right for You?

• Choose an MVL if your company has surplus assets and you want a tax-efficient way to extract value and formally close the business.

• Choose a CVL if your company can’t pay its debts, and you need a structured, legal way to bring the business to a close while managing creditor expectations.

Still unsure? Contact our team for a no-obligation consultation to discuss your company’s financial situation and the best way forward.

Why Purnells?

At Purnells, we offer free, confidential advice and decades of experience guiding companies through both solvent and insolvent liquidations. Our approachable and knowledgeable team ensures a transparent process every step of the way—whether you need an MVL or CVL.

Explore our full service range for Members’ Voluntary Liquidation and Creditors Voluntary Liquidation, or get in touch today to speak with a licensed insolvency practitioner.