Creditors Voluntary Liquidation - CVL - Free Advice with Help & Pre Planning
Creditors Voluntary Liquidation - The law & Case Studies - Benefits available from a restructure and liquidation
A Creditors Voluntary Liquidation or CVL is a liquidation where the directors "voluntarily" arrange to place their company into liquidation as opposed to having their company "compulsorily" wound up by the Court. After taking advice you would instruct a private sector insolvency practitioner to work with you to place your company into Creditors Voluntary Liquidation.
A Creditors Voluntary Liquidation or CVL is defined in a strange way by Section 90 of The Insolvency Act 1986. What that Section effectively says is that if the directors cannot swear a statement of truth that the Company is solvent (within the meaning of Section 89) then the company is insolvent!
To end its life voluntarily an insolvent company must use a Creditors Voluntary Liquidation instead of a Members Voluntary Liquidation.
A Creditors Voluntary Liquidation is the most common form of liquidation and a planned CVL of your company can, perhaps surprisingly, realise huge financial benefits - some of which are listed below. The procedure is commenced by you as the director and shareholder of your limited company - NOT by your company's creditors. This type of Liquidation is also sometimes known in shorthand by the initials CVL or by the phrases "Company Bankruptcy" or "Company Liquidation".
Purnells have developed a Guide to Creditors Voluntary Liquidations for directors of insolvent companies, which hopefully will assist directors in obtaining a better understanding of the process.
If you wish for a new company to take over the business of the liquidated company, planning and preparation prior to placing the Company into Creditors Voluntary Liquidation is key. Our Insolvency Practitioners can provide the necessary advice before commencing any action to ensure that your new company does not fall foul of Section 216 and 217 of The Insolvency Act 1986.
A short factual review with an Insolvency Practitioner prior to taking the decision to place your limited company into liquidation provides you (as a director) with a planning opportunity. The plan could both improve the position for creditors and enable you to prepare for a new business existence. The plan could include elements of some or all of the following:
- A re-start company (if required)
- Reducing staff numbers or
- A company restructure which eliminates the existing debt burden of VAT, PAYE, Corporation Tax, trade creditors etcetera or
- Closing unprofitable units or
- Leaving behind burdensome property leases or
- Leaving behind costly hire purchase, lease purchase, leasing, rental or contract hire agreements, or
- Eliminating unprofitable contracts
To read a case study of a CVL followed by a resurrected phoenix company please click on the link below:
- liquidation advice - CVL case study
As part of your planning and preparation and as a preliminary to taking Creditor Voluntary Liquidation advice for your limited company, please click on the further topics on the left hand side index on this page. Alternatively please contact any of our Insolvency Practitioners on 01326 340 579 who would be more than happy to discuss Creditor Voluntary Liquidations with you.