''My Scottish business is in trouble! What is voluntary liquidation?"
Creditors Voluntary liquidation (CVL) is a safe and correct legal way to close down a company that cannot pay its debts and is not viable going forward.
When is it necessary for the directors of the company to think about creditors voluntary liquidation?
- The company has run out of cash
- Creditors are threatening a winding up petition or other legal action
- The company appears to not be viable
- The company cannot pay its debts on time
- The directors are concerned that the business may build up more debts.
- They are also worried about wrongful trading.
Once the directors realise there is no real future for the business then a CVL is the appropriate option. Only a Licensed Insolvency Practitioner can liquidate a company. They will take over all the paperwork, books and records, liaise with creditors, collect in debts and report to the creditors. Your involvment will be over in a few weeks after the creditors meeting. The IP will have to do an investigation but as long as you have not been fraudulent or very very negligent then there isn't anything to worry about. Some companies fail but it does not mean you are a failure and the system is there to give you a second chance.
If you want to get on with your life then give us a call on 0800 9700539 and stop the worry now.
What if I think the company can survive if I can write off part of the debt or pay it off over a longer period?
There is only one company driving the rescue culture in Scotland. Welcome to Company Rescue! Liquidation or administration are not the only options! Have you considered a CVA or Company Voluntary Arrangement?
In Scotland there are few CVAs proposed and this is, in the most part, because there is a culture in the Scottish insolvency world that you should allow the creditors to take control of the debtor company. There is also a belief that the HMRC will not approve a CVA in Scotland - Not so! We have never had a CVA rejected by HMRC in Scotland. Our ethos is that if a company has a viable future (if its current problems can be solved) then you should do your up most to keep it trading and pay the creditors over time. This method has in most cases given a better return to creditors and saved more jobs than an administration, or, of course, a liquidation.
The standard approach in Scotland seems to be - if a company is struggling, put in a winding up petition and knock the company over or place it into liquidation yourself. Hence, it is even more important in Scotland to recognise the signs of distress in your company and check to see if your company is insolvent. Have a look at our insolvency test pages.