What is a Creditors Voluntary Liquidation CVL?

Sometimes a company can not trade out of its cash flow problems and does not have enough money to pay its debts as they fall due. In these circumstances the only appropriate course of action is for the directors to cease trading and in essence ‘shut up shop’. A Creditors Voluntary Liquidation (CVL) is the most common way for directors and shareholders to deal voluntarily with their companies insolvency and ensure they abide by the rules set out in ‘The Company Director Disqualification Act 1986’. The act deals harshly with directors who ignore the early warning signals.

A Creditors Voluntary Liquidation is appropriate when:

• The company is insolvent.
• A CVA is not appropriate.
• The company does not appear to be viable even if restructured.
• The directors do not feel they have the finances or determination needed to rescue the company.

In some circumstances, it may be possible for the directors to form a new company and have this company buy back the assets of the old one so as to ensure its survival and continue trading from a position of strength. This is known as a Directors Managed Buyout.

No matter what service you require, the specialists at Frazer & Frazer are here to offer their help and advice to ensure your business’s continuity.

To discuss your financial worries please call 0800 0341 776 and ask to speak to a member of our team who will be happy to discuss your personal circumstances and help you decide which way is the best way forward for YOU.

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• Common FAQ

  • What is a Compulsory Liquidation?
    A petition can be presented to the court for an order to wind-up a company. This means that the company will be placed into liquidation but unlike voluntary liquidation, compulsory liquidation involves investigation by the Official Receiver and is usually more time-consuming and expensive. Most petitions are presented by creditors. HM Revenue &. Customs frequently takes such action when liabilities for VAT and PAYE are unpaid.