What is a Creditors’ Voluntary Liquidation (CVL)?
A CVL is the most common insolvency procedure for an insolvent Limited Company (LTD) or Limited Liability Partnership (LLP) and is the mechanism for a formal winding of a company’s affairs.
The directors, of a limited company may realise that the company is insolvent since it cannot pay its debts as they fall due (cash flow insolvent) or it has more liabilities than assets (balance sheet insolvent). They will then contact a licensed insolvency practitioner with a view to reviewing the Company’s finances and where appropriate assisting them to place the company into a CVL.
What happens during a CVL?
A CVL involves the Company or LLP with the assistance of a licensed insolvency practitioner “IP” producing a statement of affairs and report to creditors and calling a meeting of its members (shareholders) and a meeting of creditors, which usually follows straight after the meeting of members. These meetings will be chaired by a director of the company though overseen by the IP.
At the meeting of members, the company will be placed into Liquidation and a Liquidator will be appointed. The creditors meeting affords the creditors the opportunity to ask questions of the director about the demise of the Company, form a creditors committee, either confirm the appointment of the Liquidator or appoint a different IP as Liquidator, and agree the basis of the Liquidators fees for calling the meetings’ and assisting with the required paperwork if no creditors committee has been formed.
A Liquidator has a duty to act in the best interest of creditors, regardless of whether they are nominated by members or by creditors.
What is a company liquidator resonsible for?
The Liquidator’s duties include the selling of the assets of the company, investigating the demise of the company and reviewing the conduct of directors, agreeing the creditors’ claims and distributing the realisations from the assets to the creditors. The Liquidators also reports annually to the creditors and again at the end of the Liquidation.
How long does CVL take to disolve a company?
The company is formally dissolved three months after the end of the Liquidation.
What is a Members’ Voluntary Liquidation (MVL)?
An MVL is the process where a solvent company is placed into liquidation, its affairs wound up and its assets realised and the company dissolved.
This occurs when the shareholders, usually at the directors’ request, decide that the company has come to the end of its useful life.
The company can or will pay all its debts including all tax obligations within 12 months of the liquidation commencement and any surplus assets are returned to the shareholders.
What is Compulsory Liquidation?
A compulsory liquidation is when an insolvent company is wound up by an order of the court. This usually takes place when a company fails to pay a statutory demand, which requires payment of the outstanding debt within 21 days, or a settlement to pay agreed between the parties. The amount owed must be more than £750.
The court can also issue an order on the petition of a shareholder, director or by the Secretary of State for the Department for Business, Innovation and Skills on the grounds of public interest.
The Official Receiver then acts as liquidator. The official receiver has 12 weeks in which to decide if there are sufficient assets to warrant the appointment of a licensed insolvency practitioner as liquidator. Alternatively, the creditors can request that a meeting is called in order to appoint a liquidator other than the official receiver.
What is a company liquidator resonsible for?
The Liquidator’s duties include the selling of the assets of the company, investigating the demise of the company and reviewing the conduct of directors, agreeing the creditors’ claims and distributing the realisations from the assets to the creditors. The Liquidators also reports annually to the creditors and again at the end of the Liquidation.
Feedback from our customers.
“We could not see any way in which we could save more than 75% of our workforce. We approached Seneca IP who assisted us in the process of Liquidation but also dealt with our staff empathically and in a most professional manner.”
“We could not trust the advice we had received elsewhere and were introduced to Seneca IP. Within minutes of meeting with Mr Hedger we were satisfied that we were in capable, professional hands. The entire team at Seneca saw us through what was admittedly a very tough time, their knowledge and professionalism was second to none and I do not hesitate to recommend them to anyone who finds themselves in the unenviable position we did.”
“I am writing this letter of recommendation to express my sincere gratitude to James Annerson and John Hedger from Seneca IP Insolvency Practitioners for their exceptional help, guidance, and support during my company’s liquidation process. Their professionalism, expertise, and friendly approach made the whole experience much less stressful than I ever thought possible.”
Call 01629 761700 today for a free consultation.
Monday-Friday: 09:00-17:00
Call 01629 761700 today for a free consultation.
E-mail: enquiries@seneca-ip.co.uk
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Monday-Friday: 09:00-17:00
Saturday: Closed
Sunday: Closed
