Benefits of a CVL
- Allows you to step away from the insolvent company with no further liability (unless debts have been personally guaranteed)
- A very quick, cost effective way of formally closing down a company and complying with your duties as a director
- Can be funded using company assets such as cash at bank, sale of assets, book debts etc
- It shows creditors you have done the right thing by taking professional advice and can steer you away from the implications of wrongful trading
- Employees and potentially directors can make a claim from the National Insurance Fund and receive payments for outstanding wages, holiday pay, pay in lieu of notice and redundancy.
Creditor’s Voluntary Liquidation or CVL is initiated by one or more of the company’s directors. A board of directors meeting takes place at which the shareholders are advised by the directors that in their opinion the company is insolvent, should cease trading and must be wound up.
The role of a Liquidator is to realise the company assets and make any necessary investigations into the company affairs. If there are sufficient assets available then he will make a distribution to creditors.
Our agents will work closely with you to establish the value of the company assets. If you are planning to set up a new company and feel the company assets are of benefit to your new venture then you will be given the opportunity to make an offer for any assets providing it reflects the valuation figures.
Once the position regarding the company’s assets has been determined we will arrange for all the necessary paperwork to be completed and convene a meeting of shareholders and creditors to put the company into Liquidation and determine the appointment of a Liquidator. Anthony Fisher of this office is a Licensed Insolvency Practitioner and will be the proposed Liquidator however ultimately the appointment decision lies with company creditors (hence the name Creditor’s Voluntary Liquidation).
If you have been experiencing pressure from creditors such as bailiff action or a winding up petition you can still put the company into Voluntary Liquidation. Once we have given notice of the meeting to creditors, any bailiff action against the company assets is void and therefore they tend to put all action on hold pending the appointment of a Liquidator.
If the company ceases trading and the employees are made redundant then we will give advice to all employees regarding making a claim in the Liquidation. There is a National Insurance Fund from which employees can be paid wages, holiday pay, pay in lieu and redundancy owed to them in preference to all other creditors regardless of the level of assets in the company.
The meeting itself will take place in a location convenient to the company creditors and will ordinarily only take an hour. The meeting will be orchestrated by Debtfocus however one director is required to personally attend the meeting. Creditors rarely attend the meeting of creditors as they usually decide on the appointment of a Liquidator by proxy. If they do decide to attend it will simply be to ask questions and raise any concerns with the Liquidator.
Once the company is in Liquidation, your role as a director ceases and your involvement from thereon is minimal. You will have to pass over any company books and records and complete a director’s questionnaire regarding your role within the company.
