CREDITORS’ VOLUNTARY LIQUIDATION (CVL)

A Creditors’ Voluntary Liquidation (CVL) is the most common corporate insolvency procedure in the UK.

When a company is insolvent and has no viable future, a CVL can be used to wind up the company’s affairs.

Though initiated by the directors, the shareholders of the company place the company into liquidation and the creditors vote on the appointment of a liquidator.  The liquidator will then realise the company’s assets and undertake statutory investigations and reporting. Funds permitting, the liquidator will also make a distribution to the company’s creditors.

Directors of companies who know or ought to know their company is insolvent have a duty to ensure they do not make the position worse for the company’s creditors.  If you are concerned about the financial position of a company you are the director of, you should seek professional advice.

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