CVL vs Administration — Choosing the Right Insolvency Route

When a business is insolvent, directors are often told they have “options”. Two of the most commonly discussed are Creditors’ Voluntary Liquidation (CVL) and Administration — but they are fundamentally different processes, designed for very different outcomes.

At Keywood Group, we regularly speak to directors who are unsure which route is appropriate. Understanding the distinction early is critical.

The Core Difference

The simplest way to look at it:

• A CVL is about bringing the company to an orderly end when rescue is no longer viable
• Administration is about rescue or restructuring, where there is a realistic prospect of saving the business or its underlying value

Choosing the wrong route can increase cost, delay outcomes, and expose directors to unnecessary risk.

When a CVL Is Usually Appropriate

A CVL is typically the right option where:

• The business is no longer viable as a going concern
• Losses are continuing to mount
• There is no credible buyer or rescue funding available
• Directors want to minimise risk and draw matters to a close responsibly

In these cases, a CVL provides clarity, control, and finality.

When Administration May Be Suitable

Administration may be appropriate where:

• The underlying business is still viable
• There is a realistic prospect of rescue or sale
• Jobs or key contracts can be preserved
• Funding is available to support the process

However, administration is more complex, more expensive, and not suitable for every insolvent company.

Cost, Control, and Risk

Directors often assume administration is the “better” option — but this is not always the case.

In practice:

• CVLs are usually quicker and lower cost
• Administration involves greater scrutiny and ongoing trading risk
• Delays can worsen creditor outcomes and director exposure

At Keywood Group, our role is to assess the commercial reality — not to force a process that doesn’t fit.

The Importance of Early Advice

The earlier directors seek professional advice, the more options remain available.

A conversation held too late can remove the possibility of administration entirely, leaving a CVL as the only remaining route.

Final Thought

Neither CVL nor administration is inherently “better”. The right choice depends on timing, viability, and risk.

What matters most is taking licensed, independent advice before creditor pressure dictates the outcome.