Creditor's Voluntary Liquidation (CVL)
Creditor’s Voluntary Liquidation (CVL) is a formal method of closing a business that no longer makes a profit, is unable to pay off its outstanding debts and is unlikely to trade out of its current position. If you’re faced with making this decision, or you’re simply looking for more information regarding a CVL, then our experts at Restart BTi are on hand to offer their company liquidation advice.
Only a qualified Insolvency practitioner can assist you with obtaining a CVL. To relieve the increasing pressure from creditors, get in touch with one of our experienced team members today.
What is Creditor’s Voluntary Liquidation (CVL)?
A CVL is a voluntary decision made by the directors of a business to place their company into formal liquidation and put their trading and services to an end. It’s a decision that is often made when the director(s) feels that there is no other viable solution moving forwards, and tends to be a last resort after all other possibilities have been exhausted. If your business experiences these circumstances, remember that this is the most common form of liquidation in the UK. You will certainly not be alone in having to go through the process of a creditor’s voluntary liquidation.
What’s the difference between a CVL and a Company Voluntary Arrangement?
With a CVA, the Director(s) of a company have directly decided to place their company into an arrangement with their creditors that pays off their debts. This means that an insolvent company is provided with the opportunity to pay off their creditors over an agreed time period. Unlike a CVL, where the company will cease to exist once the process is complete, a CVA means that a company may still be provided with the chance to be rescued once all the creditors have been paid.
Is a Creditor’s Voluntary Liquidation the right path for my insolvent business?
There are many different scenarios as to why a Director may choose to go down the route of a CVL. This may typically be because:
- The company is unable to pay their creditors debts, meaning that Director(s) are being chased for payments and the pressure is mounting.
- There has been a significant change in the market resulting in an impact on trade and decreased revenue. For example, if an industry changes its standards or competitors gain a significant advantage pushing other companies out of the market.
- The business has received a Winding Up Petition from creditors.
If you’re wondering if your business is eligible for a CVL, or you’re worried about mounting pressure to go down this route, then our professional team is here to help with free, tailored and confidential company insolvency advice.
What are the Director’s responsibilities during Creditors Voluntary Liquidation?
As a director, once your business is faced with liquidation you still maintain a legal obligation to protect the interests of your outstanding creditors. This means that you must continue to work towards a successful outcome for all parties involved. You must take expert advice before making any outstanding payments, taking further credit, selling or disposing of assets, as this decision could have consequences.
Creditor Payments
If the Company makes payment to certain creditors these payments could be construed as a preference and later challenged by a liquidator. Similarly if assets are sold for less than their market value, the sale again could be challenged by a liquidator These transactions are also matter for a liquidator to consider when submitting his report on the conduct of directors.
Director Redundancy
As a director is usually classed as an employee for the business, they are entitled to financial help during their CVL. This is called Director Redundancy, and may be of vital assistance if your business has been struggling for a period of time and that has placed you in financial difficulty. If this is an option you would like to explore, our experts are ready to help with their insightful company liquidation advice.
Company Liquidation Advice
We understand that placing your business into voluntary liquidation can be a difficult, stressful and often confusing time. Our team at Restart BTi are committed to helping you to source the best possible outcome for the closure of your business. Our experts will work with you to reduce your risk of wrongful trading, preference payments or any other issues that may arise as a result of placing your business into liquidation.
What happens after my business is placed into voluntary liquidation?
Once your business has entered voluntary liquidation, the liquidator will work with you to:
- Protect and realise the company’s assets.
- Make repayment to creditors (should funds allow).
- Submit a report on the director’s conduct to the Department for Business Energy and Industrial Strategy.
- Undertake an investigation as to the circumstances surrounding the company’s failure.
How can Restart BTi help?
Here at Restart BTi, our experienced team works with you to make sure that you are given the right company liquidation advice and that liquidation is the correct process for the Company. We endeavour to ensure that the procedure is concluded as quickly and as pain free as possible.
We offer a service that includes a free initial consultation, expert guidance and support, confidentiality, and a fully licensed practitioner that will support and stay with you throughout the full process. To get in contact and receive your free consultation, simply fill out the short form below.
FAQs
A CVL is a voluntary decision made by the directors of a business to place their company into formal liquidation and put their trading and services to an end. The advantages of doing so include:
- Directors keep control
- Potential to claim director redundancy
- Fulfils director legal obligations
- Debts are written off
- The business is closed down efficiently
Formal liquidation forced a business to cease trading. As such, there are some natural disadvantages to entering into a creditors voluntary liquidation. These include:
- Closure of the company
- Staff redundancies
- Danger of personal guarantees for directors
- Damaged reputation for directors
That being said, Restart BTI can help you to navigate this process with expert advice and support. Our team will help you to achieve the best possible outcome when faced with company liquidation. Contact us today to learn more.
It is not possible to reverse a CVL once the process has begun. However, company directors are able to purchase company assets, including stock, premises and even its name. That being said, this process is monitored very closely, therefore processes must be followed to the letter. An insolvency practitioner like Restart BTI will be able to help you navigate this process properly. Contact us today to learn more.
A CVA (Company Voluntary Arrangement) allows directors to retain control of the business and continue trading during the insolvency process. However, during a CVL (Company Voluntary Liquidation), trading typically ceases immediately and control of the company transfers to the liquidator.
Once an Insolvency Practitioner has been hired, beginning the process of a CVL can happen within 14 days. The time involved for the process to formally end varies depending on a variety of factors, including the size of the business, the amount owed to creditors, the time it takes to sell assets, and so on. On average, it can take anywhere from three months to two years to fully complete the process.
It is the responsibility of the Director(s) and shareholders of the company to begin the process of a Creditors Voluntary Liquidation.
While it is rare that a Director will be held personally responsible for a company’s debts, it can happen in certain circumstances. This includes if the debt was secured with a personal guarantee, which means that if the company was placed into liquidation before the debt has been repaid, the director will be personally liable to pay the remaining fee.
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Restart BTi
Suite 44 Dunston House
Dunston Road
Chesterfield
Derbyshire
S41 9QD
- 01246 959 388
- Fax: 03333 444 993
- Email: enquiries@restartbti.co.uk
Restart BTi is the trading name of Restart Business Turnaround Insolvency Limited, a limited company registered in England and Wales no: 11517419
Registered Office: Suite 42 Dunston House, Dunston Road, Chesterfield S41 9QD
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