Creditors' Voluntary Liquidation (CVL)

The process begins when the directors accept the company is insolvent and resolve to stop trading. You appoint a licensed insolvency practitioner to act as liquidator, who prepares a Statement of Affairs and convenes a decision process with creditors.

Once appointed, the liquidator takes control of the company’s assets, realises them for the benefit of creditors, settles employee claims, reports on the conduct of the directors as the law requires, and ultimately has the company struck off at Companies House.

From the moment you believe the company is insolvent, your legal duty shifts from the shareholders to the company’s creditors. In practice that means acting to minimise their losses and not taking on new credit you cannot realistically repay.

A CVL, handled properly, evidences that you put creditors first. The liquidator must report on directors’ conduct, so taking advice early and cooperating fully is the best way to protect your position.

Employees made redundant in a liquidation can claim statutory redundancy, notice pay, unpaid wages and holiday pay from the government’s Redundancy Payments Service — often a significant relief for staff.

The cost of a CVL is usually met from realising the company’s assets rather than from the directors personally. Most CVLs can be put in place within a week or two, with the formal process then running its course over the following months.