Creditors’ Voluntary Liquidation (CVL)
A CVL is a voluntary process initiated by the directors and shareholders of a company having recognised that the company cannot pay its liabilities as they fall due. It is usually seen as the only available option when a company’s financial position has deteriorated to a point of no return. In such circumstances company directors have a duty to act in the best interests of creditors to protect their position. Failure to do so could lead to a wrongful trading claim against the directors.
Our experts at Keystone Recovery have many years’ experience assisting directors in placing their company into a CVL process. Our team will work with you to implement the CVL process and liaise with your creditors. If you would like further information in respect of the process or require a quote, please contact us.
FAQ’s relating to the CVL process
How long does it take to enter CVL?
Providing all financial information in respect of the company is readily available, we always aim to have placed the company into CVL within 14 days of instruction. In some specific circumstances, the process may take a little longer but we will be able to advise you of this upon instruction.
What happens to the assets of the company?
The assets of the company vest in the liquidation estate. As a director, you will have the duty to deliver up all assets to the Liquidator who will aim to dispose of them for the benefit of creditors. An independent agent will usually be engaged to ensure that the best possible price is achieved for tangible assets.
Will creditors be paid?
Not necessarily. The prospect of a return to creditors is dependent upon the assets available and costs of the process. Notwithstanding this, the liabilities remain with the company (in liquidation) so you will not be held personally liable. The caveat to this, of course, is whether you have personally guaranteed one or more debts. Please contact us to discuss this further if it is of concern.
Can I start a new company and can I act as a director again?
Yes. Just because you are a director of a company that is in liquidation, you are not prohibited from being a director of other companies. The two most common scenarios which prohibit you from being a director (or involved in the management, promotion or formation of a business) are if you are declared bankrupt, or you have been disqualified pursuant to the Company Director Disqualification Act 1986. Please contact us to discuss this further if it is of concern.
How long does a CVL last?
The length of the CVL is dependent upon a number of factors, such as difficulties in realising assets, discrepancies within the company’s financial affairs that need to be reviewed and any other general complexities. A straight forward CVL would typically be concluded within 12 months. There is no time limit for a CVL and some can stay open for many years. Upon the conclusion of the liquidation, the company will be dissolved at Companies House.
Can I restart under a similar name?
Yes you can providing that you follow the correct legal process; otherwise you could face prosecution and personal financial issues in the future.
