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Creditors Voluntary liquidation (CVL)
Creditors Voluntary Liquidation (CVL)
Creditors Voluntary Liquidation (CVL) is a process where the directors of an insolvent company voluntarily decide to liquidate the business. The Liquidator sells its assets and distributes the proceeds to creditors. This is often the last resort when there’s no hope of saving the company, ensuring a structured closure while minimizing director liabilities.
When to Consider Creditors Voluntary Liquidation
How RTI Can Assist:
At RTI, we help directors navigate the CVL process, ensuring compliance with insolvency law while safeguarding your personal liabilities. Our team works with you to maximize returns for creditors and facilitate a smooth and efficient closure of your business.
While CVL is a final step for insolvent businesses that cannot continue, a Company Voluntary Arrangement (CVA) allows the business to remain operational while restructuring debts. If there’s a chance of saving your business, a CVA may be a better option than liquidation.
For more detailed information, visit our Creditors Voluntary Liquidation page.
FAQ
What is Insolvency?
Insolvency occurs when a company cannot meet its financial obligations as they come due. This situation imposes legal obligations on the directors to act in the creditors’ best interests.
When Should I Consult an Insolvency Practitioner?
Consulting an insolvency practitioner should be considered when financial distress becomes evident. Early consultation can sometimes prevent formal insolvency through restructuring or negotiating with creditors.
What is the role of an Insolvency Practitioner?
An insolvency practitioner assesses the financial state of the business, provides advice on managing debts, and, if necessary, manages the liquidation process to ensure assets are distributed fairly among creditors.
How quickly can the company be liquidated?
A company can be liquidated in 3-4 weeks after all information is provided and the fee is paid. The process can be completed in 6-7 months.
Do I still need to complete accounts and forms for Companies House or complete company tax returns after the Liquidation has started?
No, the liquidator takes over these responsibilities once the liquidation process begins.
What happens to the company after the Liquidation has ended?
The company is removed from the register at Companies House approximately 3 months after the liquidation is concluded.
The company owes me money. When will I get that back?
The money owed to you will be treated as a debt alongside other company debts, and payments are made once funds are available after liquidation costs.
I have staff. What will happen to them?
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Can my business recover after a CVL?
If staff are made redundant, they can claim redundancy payments from the government. Directors may also be able to make claims after formal liquidation.
What about the assets of the closing company? Who gets those?
The liquidator takes control of all remaining assets, selling them if necessary. Creditors are paid after the liquidator’s fee is deducted.
Who pays the costs of putting the company into Liquidation?
If the company doesn’t have enough cash to cover the costs, the director will need to pay the agreed fee. This cost is usually much lower than the company’s outstanding debts.
While CVL focuses on winding up (closing down) a company, Company Administration provides an opportunity to restructure and potentially save the business. If your company still has a viable future, you might consider Company Administration to protect the business while a recovery plan is formulated. Learn more about the RTI Approach.For more details on Creditors Voluntary Liquidation and how RTI can support you, check our assessment form to see if you are eligible, or contact us for a free, no-obligation consultation.
Pages related to Company Liquidation
CVA Company Voluntary Arrangement
Liquidation