Creditors Voluntary Liquidation (CVL) Insolvency Advice

A creditors voluntary liquidation (CVL) is a formal process of putting a company into liquidation when the company is insolvent.

Who is it for?

      • If your company has run out of cash and the creditors are chasing you for payment, a creditors voluntary liquidation of the company could be one answer
      • A liquidation or CVL as it is referred to will allow a liquidator to take over responsibility for the company allowing you to hand over the problem to a professional

What's the process?

      • In the first instance call us to arrange a chat FREE OF CHARGE. We can then talk you through the options that are applicable for your company and offer advice.  Liquidation may not be the only answer
      • A creditors voluntary liquidation involves a liquidator being appointed initially by the shareholders and confirmed by the creditors by a decision process. Most times this is done by correspondence rather than a meeting so often you don’t need to meet your creditors face to face
      • Once the liquidator is appointed their task is to sell the assets of the company, collect the debts due and then make payment to creditors if there are sufficient funds
      • There is a lot of administration that the liquidator needs to deal with to maintain the case file, filings and comply with professional standards. They will also deal with employees and creditors claims and questions. They will need to undertake an investigation into the conduct of the directors during the lead-up to the liquidation
      • Once finished the liquidator will prepare a report detailing the work that has been carried out and file a final receipts and payments account at Companies House. The whole process can take several months to many years depending on the complexity of the case. For straight forward businesses, the process normally lasts about a year but after the first few weeks the directors’ input is minimal and you are able to get on with your life

Anything else I should know?

      • Lots! Liquidation is a complex process and may have knock on effects. Every situation is different and requires a bespoke approach
Chris McKay, insolvency Practitioner in Cambridge

Chris McKay

Licensed Insolvency Practitioner in Cambridge & Peterborough

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Please get in touch. We don’t charge for an initial meeting and we are always happy to chat. Call me on 01223 803445, email or click the chat button


Advantages and Disadvantages

Advantages of a CVL

  • Brings the company to an end
  • Directors can buy back business and assets
  • Allows a controlled winding down
  • Liquidator deals with creditors
  • Directors can move on
  • Directors can run another business
  • Employees claims paid by government
  • Normally no creditors meeting

Disadvantages of a CVL

  • Cannot reuse company name
  • Personal guarantees get called
  • Loss of income
  • Investigation into directors conduct
  • Beware loans and dividends

Frequently Asked Questions

Most frequent questions and answers about a Creditors Voluntary Liquidation

Am I personally liable for the company's debts?

Normally no, the company is a limited liability company which means that the debts stay with the company. However, you may be liable for some debts if you have given personal guarantees or committed an offence under the Insolvency Act 1986

Can I start another company doing the same thing?

Yes – there are restrictions on the name that you can call the business and you should take advice before you start to trade as there may be complications if you start too soon

What about my employees, will they get paid?

There is a government scheme that will make payments for arrears, holidays, notice and redundancy pay up to a weekly limit

Can I still be a director of another company?

Normally, yes