A Creditors Voluntary Liquidation’s (CVL) cost can vary depending on the nature and complexity of the company and its circumstances. Factors affecting the potential cost of a liquidation can include whether the company has any assets and the number of shareholders.

What is a Creditors Voluntary Liquidation?

A Creditors Voluntary Liquidation (CVL) is a formal process available to insolvent companies. A CVL sees the voluntary liquidation (winding up) of a company and the sale of its assets to cover the outstanding debts. Any remaining unsecured debt is written off at the end of the liquidation, with employees able to claim redundancy from the government’s Redundancy Payments Office. 

The process is overseen by a licensed insolvency practitioner (IP). As the appointed liquidator, we are responsible for acting in the company’s creditors’ best interest to secure a return. 

How much does a Creditors Voluntary Liquidation cost? 

The liquidation’s cost can vary depending on the company’s circumstances, including:

• The level of debt.
• The number of shareholders.
• The quantity and value of its assets. 

Speak to our initial advisors. They can assess your company’s circumstances and provide free, impartial, confidential advice with no obligation. If they feel a liquidation would be the best course of action for your company, they can arrange an appointment with a consultant who can provide you with a quote.

How are a liquidation’s costs paid for? 

A liquidation’s costs can be covered in a number of ways. These include: 

• Sale of company assets
  If the sale value of the company’s assets is sufficient, those funds may cover the IP’s costs for carrying out the liquidation. This means all costs are covered by the end of the liquidation process, with no outstanding balance left. 
• Personal funding
  Directors may choose to fund the cost of a liquidation via their personal finances. This may include selling personal assets, using savings, or raising finance through a personal loan. 
  Personal funding only usually applies to fixed costs incurred in the IP’s pre-appointment stage. These can be paid directly to the Insolvency Practice. 
  This would usually only occur when there are no other viable ways to pay for the liquidation, such as through the selling of company assets. 
• Director redundancy pay 
  Directors may also choose to fund the cost of a liquidation through their own redundancy pay. To do this, they must have been an employee of the company for at least two years, working at least 16 hours a week. Directors must receive a monthly wage from their company in order to be entitled to redundancy pay upon liquidation. 

If your company is insolvent and you would like to discuss a CVL or the cost of a liquidation in more detail, call us for free advice. We can assess your level of potential redundancy before committing to the cost of a CVL. 

What if the company can’t afford the cost of a liquidation?

If your company is facing cash flow problems and the cost of a liquidation is beyond the company’s affordability, our consultant can discuss your options or advise on how a liquidation could be funded.

What are the benefits of closing the company through a CVL?

A liquidation is a formal and regulated process, resulting in the closure of a company and the discharge of debt. Because a company’s unsecured debt is tied solely to that company, there is very little risk to directors’ personal finances when carrying out voluntary liquidation.

Some benefits of a CVL can include: 

• The sale of company assets goes towards repaying any outstanding debt, with the remainder ‘dying’ alongside the company. 
• Directors’ personal finances are not at risk (as long as they’re not found to have committed fraudulent trading or signed a personal guarantee on company debt). 
• The liquidation process is overseen by a licensed and regulated insolvency practitioner, making it secure and straightforward for company directors. 
• All compliance and communication with authorities are upheld by the insolvency practitioner. 
• Directors’ redundancy payments can cover a liquidation’s costs if no capital remains in the company after liquidation. We can look into your potential redundancy claim. 
• Company employees can claim redundancy pay directly from the government’s Redundancy Payments Office. 
• The director may purchase assets out of the CVL process, a process known as ‘pre-pack’ liquidation. This is subject to third-party valuations on the sale of assets. 

How we can help 

If your company is struggling to meet its liabilities to creditors and its finances are suffering, we can help. 

1. Speak with our initial advisors via phone or online chat. If we can help, we will arrange a free consultation with a consultant to further discuss your situation.
2. During the consultation, we will advise if liquidation is the best option or what alternatives are available.
3. After your consultation, if there is an appropriate route forward, we will issue the relevant documentation to start a formal engagement.

We can provide the necessary expertise to advise you on how a CVL may best apply to your company and are licensed and regulated to carry out the process from start to finish.  

In summary 

Creditors Voluntary Liquidation (CVL) is an insolvency process for companies that can’t pay their liabilities to creditors. A CVL involves the complete closure of the associated company and the realisation (selling) of its assets to generate capital to repay its creditors.

The cost of a liquidation will vary depending on the size of the company, the number of creditors, and the nature of its assets. The process relies on the appointment of a licensed insolvency practitioner (IP) as liquidator, who acts on the company’s behalf to realise assets, repay creditors, and organise all the necessary procedures for legal compliance.

Case Studies

Statestrong Limited

Kelly Burton • Manufacturing • Administration, Creditors Voluntary Liquidation (CVL)

Insolvency experts Wilson Field has helped turnaround the fortunes of a loss-making manufacturing company in Lancashire providing a new future for its 80 employees.

Businessman Russell Blaikie acquired the struggling 40-year-old Statestrong Limited, headquartered in Lytham St Annes, through a pre-pack sale and has been able to help the company immediately utilising his expertise in manufacturing and management.

Arrangements for the purchase of Statestrong’s business and assets were negotiated by Sheffield business specialists Wilson Field who affected the sale shortly after being appointed.

The company, which manufactures and supplies aerosol and liquid products for use in health and beauty, household, automotive and industry globally, posted sales of £12m last financial year, but had suffered pressure from creditors with outstanding arrears.
The total value of the deal is undisclosed but includes the business and the assets of the company based on Boundary Road in Lytham St Annes and Tarporley in Cheshire, which will now trade as Statestrong Products Limited.

Mr Blaikie said:

“Transactions of this nature are sensitive and require careful handling. The team at Wilson Field provided exactly the right professional approach.”

Wilson Field’s insolvency practitioners Kelly Burton and Joanne Wright worked closely with Mr Blaikie along with senior corporate case administrator Gareth Kinneavy.

Kelly Burton, said:

“The company had a wealth of expertise but was straddled with financial liabilities which ultimately made its future questionable. Looking forward, a previously distressed business now has a viable future.”

M J Squire Limited

Kelly Burton • Construction & Engineering • Creditors Voluntary Liquidation (CVL)

A bespoke joiners and shop fitters in Sheffield, M J Squire Limited, had been in its trade for more than 30 years.

However, recently it has been forced to close due to the downturn in the construction and retail industry.

The company was located at Orgeave Close in Sheffield, after working for many household names over the years including House of Fraser, Levi’s, Austin Reed and Tommy Hilfiger.

Until 2014, it had been a profitable company but over the past couple of years, it had been unable to secure profitable contracts.

February 10^th, 2016 saw the appointment of Wilson Field’s Andy Wood and Robert Dymond as liquidators. This development for the company came as a result of suffering cash flow problems.

Operations at M J Squire Limited have now ceased and regrettably, all nine roles within the company were made redundant.

Andy Wood, insolvency practitioner from Wilson Field, spoke about his work on this case. 

“Declining sales at M J Squires significantly impacted cash flow and the business’ ability to meet its liabilities. In the face of tough market conditions, the director has taken the difficult decision not to continue trading. The business has closed and the assets are being sold.”

“It is very sad to see this well-known local business cease to trade after over 30 years. The downturn in the retail sector has hit this business hard.”

Derwent Castings Limited

Kelly Burton • Metals • Creditors Voluntary Liquidation (CVL)

Unsecured creditors owed money by a Derbyshire manufacturing company which went into liquidation are to receive a higher than the expected dividend of 60p in the pound.

A total in excess of £128,000 is due to be distributed to unsecured creditors of Whatstandwell-based Derwent Castings Limited, whose claims totalled over £192,000.

The company, whose roots date back to the 1940s, had traded profitably for a number of years but in late 2013 / early 2014 saw the cancellation of its largest sales contract which represented 70 per cent of its turnover.

Bosses at the company, which employed 16 staff including three directors, struggled to attract replacement business and had to drop prices. Further business was lost as a result of foreign competition.

Sheffield’s insolvency specialist Wilson Field was called in as liquidator and worked with the creditors’ committee of Derwent Castings Limited to secure the positive dividend.

Andy Wood, associate director and insolvency practitioner at Wilson Field said:

“Dividends for insolvent companies are generally low, or nothing, for a variety of reasons – cost of staff redundancies, difficulty collecting outstanding invoices, selling assets in a forced sale situation, selling specialist assets which have limited appeal to purchasers, deteriorating or perishable assets, as well as other costs involved.

“However, thanks to a very positive relationship with the creditors committee, I am delighted to return a healthy dividend to the unsecured creditors in the region of 60p in the pound.

“The supply chain is often greatly affected by a liquidation and in this case we have been able to help creditors.”

Derwent Castings Limited was incorporated in August 2002 and specialised in iron casting from the five-acre Derwent Foundry site at Whatstandwell near Matlock.

However, the iron founding operation at Derwent Foundry was first introduced back in 1946 by Wragg & Hawksley which produced cast iron pipes for the water industry.

In 1950 the foundry was acquired by WH Davis & Sons Ltd to supply castings for their railway wagon building business. Following a management buy out in 1984, the company was renamed Derwent Foundry Ltd and following its closure in July 2002, was bought by its present owners and renamed Derwent Castings Ltd.

Amongst jobs carried out on site were moulding using loose pattern and modern air setting (boxless) sand systems; metals work using the latest in electric induction melting producing a wide range of grey, SG and alloy irons; an independent Namas approved test laboratory, finishing, pattern making and machining facilities.

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