Creditors Voluntary Liquidation (CVL)
A CVL is suitable where there are insufficient assets to meet liabilities and the company is no longer viable.
A board meeting is held to resolve that the company cannot continue to trade and that it should be placed into liquidation.
The shareholders will then decide whether to place the company into liquidation and appoint liquidators.
The creditors receive a short report on the company and will decide whether or not to ratify the appointment of the liquidators.
The subsequent meeting of creditors receives a short report on the company and ratifies the appointment of the liquidators.
The liquidators’ role is to realise the company’s assets for the benefit of its creditors and pay a distribution to them.
Members Voluntary Liquidation (MVL)
An MVL is an option available to solvent companies, usually when there is a breakdown of relationships between key stakeholders, changes in market conditions, or members simply wishing to retire.
The directors produce a schedule of assets and liabilities, and make a statutory declaration that the company’s debts will be paid within twelve months from the date of liquidation. A liquidator is appointed by the shareholders.
Once all the funds have been distributed to creditors, the surplus funds are given back to the shareholders. There is no requirement for the insolvency practitioner to investigate the conduct of the directors.
There are also tax advantages and planning opportunities with an MVL that we can assist and advise you upon.
Compulsory liquidation may also be referred to as a winding up of the company, and happens as a result of a Court order. A compulsory liquidation completely takes control away from the directors, as the Official Receiver is initially appointed as the liquidator to deal with the winding up of the affairs of the business.
Where appropriate the Official Receiver will appoint an Insolvency Practitioner to act as a liquidator if the company has sufficient assets that need to be realised and distributed. A winding up order causes an immediate cessation of trading.
The liquidator has the same duties as a liquidator in a CVL, but the investigation element of the director’s conduct and the affairs of the company leading up to the winding up order is predominately dealt with by the Official Receiver.
If you are issued with a statutory demand, then you have limited time to keep control of the business. If a winding up petition is issued, then it is not too late for us to help you. You really must act immediately if you are faced with this possibility.
Call us on 0800 0141 130 to arrange a free, confidential meeting to discuss if a solvent or insolvent liquidation is the best solution for your company.