Guide to Creditors Voluntary Liquidation or CVL

Creditors voluntary liquidation is when a company stops trading and its assets are "liquidated" and turned into cash.

How does it start?

Creditors voluntary liquidation is started by the directors. They inform the shareholders that the company is not viable, is insolvent and so they must stop trading. The shareholders then ask a licensed insolvency practitioner to call a creditors meeting as soon as possible (not less than 14 days notice is required, but its usually 21 or so days). At this meeting the creditors vote to appoint a liquidator.  These meetings are usually held virtually unless this is explicitly requested by at least the following;

• 10% by value of creditors or
• 10% in total number of creditors or
• 10 individual creditors

Then a physical meeting can be held.  However, In the current Coronavirus crisis, no meetings can be held. 

Voluntary liquidation can help you to end the worry. The process stops creditor pressure and worries, end those sleepless nights and ultimately help you get on with your life.

In the latest statistics for Q4 2020 there were 2,510 creditors’ voluntary liquidations (CVLs) up from 1,920 in the Q3 2020. Compulsory liquidations saw the largest percentage decrease in Q3 2020, falling 80% compared to the same quarter in the previous year.

Download our free 50 page pdf experts guide to creditors voluntary liquidation guide for more free information

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.

Creditors Voluntary Liquidation Process Step by Step

Step 1

Find a liquidator. We have a number of licensed insolvency practitioners at the firm. Uniquely to KSA Group, YOU can speak to one of our IP's TODAY, if you call now on 08009700539. It is not legally possible to liquidate your own limited company!

Step 2

Pass details of any company assets over to the proposed liquidator, and our valuers may get these valued. This will independently set the value of the assets for going to auction, or you may wish to buy these back

Step 3

Let us know who the company owes money to (creditors). KSA Group will write to them all to let them know what's happening and tell them that a creditors meeting will be held. The meeting can be held over the phone or online. This will quickly remove creditor pressure from YOU and they will start talking to KSA instead!

Step 4

Give us all company information and books and records. KSA Group will give you a list of all the information we need in order to liquidate your company. This information will allow us to prepare the necessary reports for the creditors

Step 5

A company director needs to "chair the meeting of creditors". In actual fact the liquidator will run the meeting but you or one of your directors must attend it by law. The meeting of creditors is usually a simple short meeting with no one attending and can be done online or by phone conference

How Much Does Creditors Voluntary Liquidation Cost?

How Long Does the Process Take?

Is It Possible To Reverse A Creditors Voluntary Liquidation?

What happens after the CVL is completed?

Will Voluntary Liquidation Stop My Worries?

Voluntary Liquidation enables you to wrap up your company quickly and professionally. You can then become director of another company once the liquidation process is complete, but there are restrictions on the re-use of the company name. You will no longer be authorised to trade under an identical or similar name - it could lead you in court if you do so.  It is worth noting, if as a director you have been compliant and on the payroll for many years, you can actually claim redundancy from the government like any other employee. Ask us about this.

It might be easier to see the creditors voluntary liquidation process in a flow chart

Watch the video below to understand a bit more about voluntary liquidation