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What is a Creditors Voluntary Liquidation?
A CVL is a formal insolvency process where a Company’s directors voluntarily choose to wind up the business, appointing their nominated Insolvency Practitioner to liquidate assets, settle creditor claims and dissolve the Company. Entering this process ensures an orderly closure, carried out by a qualified professional.
How does a Creditors Voluntary Liquidation work?
A CVL is the most widely used insolvency process in the UK, accounting for approximately 80% of all insolvency procedures.
A CVL is a tried and tested process which is firmly embedded in the Insolvency Act 1986. It is classed as a terminal procedure and is a very efficient way of closing down an insolvent company. Although a CVL is classed as a closure option, this does not mean that the business, assets and employees cannot be incorporated into a new entity.
There are well-established rules for dealing with employees, landlords, pensions, creditors, property and company assets that enter a CVL. Having an experienced insolvency advisor who takes the time to plan and explain this process can make a great difference to directors considering this as an option to close their company.
