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Creditors’ Voluntary Liquidation (CVL)
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If a company is unable to pay its debts and there is no opportunity to rescue it a Creditors' Voluntary Liquidation ("CVL") may be the only appropriate option.
If a company cannot pay its debts in full and there is no reasonable prospect of a rescue there are serious risks for directors in continuing to trade or doing a "DIY" liquidation. It is therefore important that directors are fully informed about their legal responsibilities, fully understand the options available and can evaluate the risks to them of each option. If this is of concern to you please contact us for a free initial consultation.
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A CVL allows directors and shareholders to take control of a situation which is often out of control. It allows directors to deal voluntarily with a failed company in a proper manner and to avoid the involvement of the Courts. We can assist directors to convene meetings of shareholders and creditors to place the company into liquidation and, of course, act as the liquidator.
Once the company is in CVL it will usually cease trading and the employees will be dismissed. The directors will be released from their obligations to the company and the liquidator will realise the company's assets, agree and where possible pay the claims of the creditors and investigate the company's affairs and the directors' conduct.
Benefits of a CVL include:
- the company's affairs are concluded in an orderly manner;
- creditors are protected from further exposure to risk of unpaid debts;
- directors discharge their duties properly and are able to "get on with their lives";
- assets are sold and payment made to creditors in a legal, fair and transparent way;
- all or part of the business may be saved by a sale from the liquidation.
Frequently Asked Questions:
| What happens if no creditor takes action? |
Companies House will fine the company for not filing accounts or returns and may also fine the directors. If, even in the face of fines, nothing is filed the Registrar may take steps to strike the company off. |
| What if I just resign as a director? |
As a director you have a duty to act in the interests of creditors in general. A Court is unlikely to accept that resigning as a director complies with that duty and you may face action against you. |
| How long will it take to put the company in CVL? |
It depends on the complexity of each case. However, in most cases it will take two to three weeks to prepare the documents and convene the meetings. |
| What will it cost? |
Each case is priced on its own merits and reflects its complexity and the amount of time required. We will be happy to give an indication of cost once we understand the intricacies of the case. |
| What if we have not got any cash? |
We have come across this problem before! We may still be able to help but, in any event, our first consultation is free so please contact us to discuss your options. |
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