Creditors Voluntary Liquidation (CVL) may be the solution if your company is suffering from creditor pressure or cash flow difficulties.

Thinking of a CVL?

Here are some of the advantages:

  • Quickly removes creditor pressure.
  • Stops further legal action.
  • Can provide the lifeline a ‘business’ needs to continue trading under a different legal entity.
  • Allows your employees to claim their unpaid wages and redundancy pay from the government.


0800 901 2475

Live Chat

Click here

Schedule a Call

Click here

Free Advice

Operate Nationwide

Licensed & Regulated

    GDPR has been accepted.By using this form you agree with the storage and handling of your data by this website. Privacy Policy
    star_rate star_rate star_rate star_rate star_rate

    "I have received a free consultation from Beverley Horton. The consultation was via online chat, easy and very effective."

    star_rate star_rate star_rate star_rate star_rate

    "I spoke to Chris Callaghan and found him to be extremely helpful and knowledgeable with a very pleasant manner."

    star_rate star_rate star_rate star_rate star_rate

    "Really professional and informative company and the advice provided by Steven Hall was very helpful. Highly recommended."

    Creditors Voluntary Liquidation (CVL)

    A Creditors Voluntary Liquidation (CVL) is a formal insolvency procedure used to close an insolvent company. If company debts have become unmanageable and pressure from creditors is unbearable, and you know the business cannot continue, you might decide you want to put an end to things and close the company.

    What is it and how can it help my company?

    Creditors voluntary liquidation is the most common form of liquidation in the UK. A company that decides to implement a CVL generally has little or no cash flow making it difficult to pay debts as and when they fall due and ultimately can make it impossible to continue trading.

    As the name suggests, the process is a voluntary option for directors and shareholders. It brings an end to worries regarding company debts. However, it should not be confused with compulsory liquidation, which is the process where one or more of the company’s creditors issue a winding-up petition to the company, which if ignored effectively forces the company into liquidation.

    The directors initially decide to enter the company a CVL. However, it is the shareholders that have to pass the relevant resolutions.

    How will a CVL affect you as a director?

    When the directors decide CVL is the best way forward, the company will generally cease trading immediately. It gives director’s some breathing space as they know the company will be closing, and they no longer have to deal with intense pressure from creditors. By stopping trade as soon as the company becomes insolvent, the directors do not run the risk of wrongful trading.

    Can I set up another limited company?

    A CVL will give directors the chance to move on from the company, and if there has been no disqualification order, they will have the option of setting up a new company. During the process of a CVL, the liquidator will look into the actions of the directors in the period preceding liquidation and if there has been any wrongful trading or failure to fulfil duties, they could face disqualification of up to 15 years.

    In some instances, directors will be able to go through a pre-pack liquidation and buy back the assets of the existing company, starting a new company to continue the business in a different name. A pre-pack liquidation is an informal term used where assets are sold at market value to a new company before the liquidation of the existing company takes place (also known as phoenixing).

    Creditors Voluntary Liquidation (CVL)

    What about redundancy pay?

    Both directors and employees may be eligible for redundancy pay. Directors can even use the funds they may receive as redundancy pay, to fund the cost of the liquidation, if there are no company assets available. There are specific criteria directors must meet to claim for redundancy – for example, they must have also been an employee of the company receiving a weekly or monthly wage for hours completed. If the criteria are fulfilled, directors will be able to claim redundancy through the National Insurance Fund.

    What happens to employees?

    Unfortunately, during the process of a liquidation all assets are sold and employees’ jobs will be made redundant. If there are no funds to pay employee redundancy money, then like the directors, they can also claim through the National Insurance Fund, as long as they fulfil the criteria.

    What are the advantages of a CVL?

    It is never pleasant when a company needs to ‘close its doors’. However, when it becomes apparent that a company is no longer viable and cannot be rescued, it is often better for directors and creditors if a CVL commences as soon as possible.

    • It can be possible for directors or shareholders to purchase company assets at market value and trade again in a similar line of business.
    • It enables creditors to submit their claims in a controlled manner. This also allows directors to have greater control over the closure of the business.
    • Employees who are made redundant will still receive any redundancy payments due from the Redundancy Payments Office (subject to limitations).
    • By ceasing to trade the company upon the realisation of insolvency, the directors reduce the risk of wrongful trading.

    The process

    As part of the CVL procedure, we will discuss through all the options available to you before any decisions are made.

    Consider the options

    Discussions will take place about your company’s financial position and a summary of options available to you to work out a beneficial way forward.

    These options will include but will not be limited to

    Meet a consultant
    After the initial discussion, if you wish to consider your options in more detail, one of our insolvency consultants will arrange a face-to-face meeting. This will be at a location convenient for you. This consultation will be entirely free of charge and without obligation. During this meeting we will review, amongst other things, the company’s viability, history, forecasts and assets and liabilities. You may need to compile information for the meeting, but we will inform you of these documents beforehand.
    Formal instruction
    Following the face to face meeting, if the conclusion means the best way forward for the company is a CVL, you will formally engage us. The consultant will pass your case file to a licensed insolvency practitioner. The insolvency practitioner will act as the proposed liquidator.  We will become your creditors’ point of contact. Any letters or phone calls you receive from them should be directed to us, so we may deal with them on your behalf. This should hopefully alleviate any stress that you may have been experiencing due to creditor pressure.
    Arrangement of creditors meeting
    You will be asked to provide details of the company’s creditors, including banks, trade creditors, finance companies, employees etc. The insolvency practitioner will write to your company’s creditors providing them with details of the creditor’s meeting. A section 98 meeting is another name for this meeting. Creditors must have at least seven days’ notice (plus postage time) and shareholders 14 days’ notice. Seven days prior to the meeting, advertisement of it must be in the London Gazette.
    As of 6th April 2017, the liquidator would normally arrange a virtual creditors meeting. This can be organised in a variety of ways, such as by conference call, or perhaps Skype. If the creditors involved want a physical meeting, it must be specifically requested by at least 10% by value of creditors, 10% in total number of creditors, or 10 individual creditors.
    Collation of information & drafting of directors report and statement of affairs
    As part of the liquidation process, directors should prepare a report and statement of affairs to present at the creditors meeting. This is something we will assist with. As such, the proposed liquidator and their team will need the relevant information to prepare this. The information required will vary case to case. However, there is an expectation of production of details regarding the company’s assets and their likely value. The directors also need to provide a trading history of the company, outlining problems encountered and the company’s reasons for failure.


    The instructed insolvency practitioner will arrange for an independent valuation of any assets. There must be approval by directors of the report and statement of affairs, before presenting to members and creditors at subsequent meetings.
    Attending the shareholders & creditors meeting
    With the changes in policy regarding creditors meeting, it’s very rare that there will actually be a physical meeting between creditors, the directors and the liquidator. However, to pass the resolutions a minimum of 75% of shareholders must vote.


    The creditors meeting typically takes place straight after the shareholders meeting. A director must have a virtual presence at both meetings and will act as chairman. However, the insolvency practitioner will assist and effectively ‘run’ the meeting with you. Creditors will be given the opportunity to ask any questions. These may regard the failure of the business and/or the director’s conduct.

    Since April 2016, a system of “deemed consent” is used. This involves sending written proposals to creditors concerning appointment of a liquidator. Unless 10% or more object the proposal is approved.

    Appointment of liquidator & liquidation commences
    Once the creditors have ratified the appointment of the liquidator, the liquidator has many duties to carry out.

    These include, but not limited to, the following:

    • Realisation of company assets
    • Liaising with creditors regarding the progress of the liquidation and dividend prospects
    • Dealing with any employee claims
    • Carry out statutory investigations into the company’s affairs and conduct of the directors
    • Submitting a conduct report to the insolvency service outlining their findings
    • With regards to available funds, an agreement of claims is made for a distribution to creditors

    Once you become aware the company is unable to pay its debts as and when they fall due, as a director you should take action. Failure to do so could put you in a situation where an action for wrongful trading may later be taken against you. This could put your personal assets at risk. Early action by directors can prevent this.

    In summary

    A creditors voluntary liquidation is a formal insolvency procedure which effectively closes down a company. The procedure is for limited companies which can no longer continue trading and are insolvent. It enables them to dissolve the company, with all the debts dying with the company. The CVL process can only be carried out by a licensed insolvency practitioner.

    How we can help

    If creditor pressure is simply too much and the company cannot continue working under the current circumstances, acting quickly and efficiently is vital. If you want to close your company and start afresh, or simply walk away, but you’re unsure on the best way forward, we can provide you with the correct guidance and the best possible advice on what’s best for your company.

    Beverley Horton Christopher Callaghan Stephen Hall

    Free Consultation

    Request a free confidential telephone consultation from 9am to 9pm, 7 days a week.



      Bilal Khalifeh

      star_rate star_rate star_rate star_rate star_rate

      I have received free consultation from Beverley Horton. The consultation was via online chat, easy and very effective.

      View More

      Giampiero Mastino

      star_rate star_rate star_rate star_rate star_rate

      Thank you for your fast response and help

      View More

      Alicia Reade

      star_rate star_rate star_rate star_rate star_rate

      An answer within minutes to something I needed the answer to! Great help, thank you!

      View More

      - As seen in -

      Beverley Horton Christopher Callaghan Stephen Hall

      Free Consultation

      Request a free confidential telephone consultation from 9am to 9pm, 7 days a week.