Close a company. A Creditors Voluntary Liquidation CVL could be the answer
- A CVL will quickly stop pressure from your creditors
- It can allow the business to trade under a new entity
- It allows Directors to be professional, proactive and contribute to the closure strategy
- It stops any further legal action being taken
- It allows your employees to claim any wages or redundancy pay from the government
- A Liquidator will deal with the Company’s affairs, leaving you to focus on your next steps
We know that it is often difficult for business owners to make the decision to shut a firm that is experiencing financial difficulties. In many cases, you will have already struggled to manage cash flow, meet the wage bill and keep your creditors at bay, no doubt leaving you feeling stressed and overwhelmed. That’s why our team of experts are on hand to listen to your unique set of circumstances before guiding you through the process of a Creditors Voluntary Liquidation.
What is a Creditors Voluntary Liquidation?
A Creditors’ Voluntary Liquidation (CVL) is the most widely used form of liquidation in the UK. It is generally used when the Company’s directors choose to voluntarily close the business in a way that is efficient and professional. Generally a CVL will be used in situations where the company has little or no funds to pay its debts as and when they become due, meaning it is technically insolvent.
How does a CVL work?
The first step is to speak with one of our experienced team, who will usually be a Licensed Insolvency Practitioner, who will conduct a full review of your company’s financial position in order to determine whether a CVL is your best option, as there may be other suitable rescue alternatives depending on your circumstances. In cases where a CVL is appropriate, you engage the Insolvency Practitioner as your proposed Liquidator who will liaise with your creditors and start the formal side of the process, providing all of the documentation that is needed. The Insolvency Practitioner will arrange for a meeting of shareholders to be called in order to formally place the company into liquidation. The Insolvency Practitioner will also write to your creditors, HMRC, the company’s bankers and others to advise that the company will be placed into liquidation. Our team will advise you whether a creditors meeting will be required, or whether a different route can be used where no creditors meeting is necessary.
Creditors are given notice of the liquidation (and whether there is to be a creditors’ meeting). If there is to be a meeting, in practice it is rare that anybody other than the directors and the insolvency practitioner will attend. The liquidation will also be advertised in the London Gazette (a statutory notices newspaper which banks and other financial institutions will read). Prior to the liquidation, the Insolvency Practitioner will work with the directors to prepare a pack of information that will outline the company’s position and how it has reached the point of insolvency, including a summary of the company’s assets and liabilities. If there is a meeting, the Insolvency Practitioner will conduct the meeting on behalf of the directors and present the information pack. If any creditors do attend, this will often be by telephone conference call and they will be given the opportunity to ask questions, and the Insolvency Practitioner will discuss with you before the meeting if this is likely to happen and what to expect. The Liquidator is appointed if creditors representing more than 50% of the value of claims voting are in favour for the proposed liquidator.
Once the Liquidator is formally appointed, it is their job to realise the assets of the company in order to pay a dividend to the creditors. Other duties include:
- Liaising with creditors regarding the progress of the liquidation
- Liaising with employees and the Redundancy Payments Office to agree claims
- Carrying out investigations on the causes of insolvency and the conduct of directors
- Submitting a report to the Insolvency Service regarding the Directors conduct
- Agreeing the creditors’ claims and paying any dividend from assets available
- Closing down the bank account, HMRC account and arranging the dissolution of the company
It is important to note that Directors of the company must carefully consider and document any decisions made during trading that continues after they realise the company is insolvent. If the directors continue to trade after this point, and a creditor challenges their actions, this can result in a prosecution and financial claim for wrongful trading which may put the Directors personal assets at risk. We will advise you on minimising these risks.
Why use Leading Corporate Recovery?
Our team are always on hand to guide you every step of the way
We understand that you may need advice quickly. That’s why our team of experts are available by email or telephone outside of standard office hours in order to provide an efficient service without compromising quality. Additionally, we know that keeping your business running is always a priority which is why we are happy to meet with you out of hours in the evening or at weekends.
Our team are empathetic and non-judgemental
We know that it can be difficult to discuss the challenges your business has faced and that coming to terms with your current financial position can be daunting. That is why our team of experts will take the time to listen without judgement in order to help you find the best way forward for your business. Our team are empathetic, discrete and will always ensure you are fully aware of all of the options available to you.
We offer flexible payment plans
We appreciate that many of our corporate clients are already strapped for cash. That’s why we always provide a free, no obligation consultation to discuss your options and if you would like us to act for you, we are always prepared to agree a flexible payment plan.