What is Creditors’ Voluntary Liquidation (CVL)?

A Creditors’ Voluntary Liquidation (CVL) is a formal insolvency process used to close a company that can no longer pay its debts. If your company is facing mounting pressure from creditors and struggling with cash flow, a CVL may be the best solution.

When Should You Consider a CVL?

A CVL may be appropriate if:

  • Your company has unmanageable debts and cannot meet its financial obligations.
  • Creditors are chasing for payment that the company cannot afford.
  • The company has cash flow problems that cannot be resolved.
  • The company has ceased or will soon cease trading.

The CVL Process

Director Decision

Directors must hold a board meeting to agree that the company is insolvent and should enter liquidation.

Insolvency Practitioner Appointment

A Licensed Insolvency Practitioner (IP) must be appointed to manage the process.

Shareholder and Creditor Meetings

Shareholders must pass a special resolution (75% majority) to approve the liquidation. Creditors are invited to a decision process to confirm the appointment of the liquidator.

Liquidation Process

The appointed IP takes control of the company, realising assets, dealing with creditors, and distributing any remaining funds.

What Happens to Directors?

While directors’ powers cease once the CVL is approved, they must still cooperate with the liquidator throughout the process. Directors may also be required to explain the company’s financial position and conduct leading up to the liquidation.

Employee Rights in a CVL

Employees may be able to claim redundancy pay, outstanding wages, pay in lieu of notice and holiday pay from the Redundancy Payments Service (RPS). We can guide you on how employees should submit their claims.

Why Choose DCA Business Recovery?

At DCA Business Recovery, we understand how challenging this decision can be. Our experienced team will provide clear, practical advice tailored to your company’s circumstances. We will guide you through the CVL process with empathy and professionalism, ensuring you understand your options every step of the way.

If your company is facing financial distress, contact us today for a confidential consultation to discuss the best course of action for your business.

Further Guidance

For additional support, explore our FAQs for quick answers to common questions about Creditors’ Voluntary Liquidation. You can also download our PDF guides for clear, practical guidance on each step of the CVL process. These resources are designed to help you make informed decisions and efficiently wind up your insolvent company with confidence.

Guides

Download PDF guides with clear, practical advice on managing a Creditors’ Voluntary Liquidation, including compliance requirements and the key steps involved in efficiently winding up an insolvent company.

Frequently Asked Questions

The process is relatively straight forward and commences with a meeting of the board of directors. Notice is then sent to shareholders of the company and to creditors of a meeting to place the company into liquidation.

A shareholders meeting is held for the shareholders to agree to place the company into liquidation, followed swiftly by a creditors decision procedure; a meeting of creditors held virtually for creditors to attend or via deemed consent.

This process is covered in our initial meeting.

Yes. A director is nominated to chair both meetings and will be required to attend our offices on the chosen date.

There are two resolutions passed at the shareholders meeting; one to place the company into liquidation which requires 50% of shareholders to agree and a second resolution to appoint a liquidator which requires 50% of shareholders to agree.

Creditors cannot oppose the liquidation, but they are able to put forward their own nomination for liquidator if they have the required values for voting.

Generally to place a company into liquidation will take a minimum of 14 days from instruction and receipt of the relevant paperwork.

Employees can claim arrears of wages, pay in lieu of notice, holiday pay, arrears of pension contributions and redundancy from The Redundancy payments Office. We offer guidance and support to employees as part of our fee.

An agent will be instructed to value the assets. Should any interested parties become known we will inform the agent and discussions will be held between the agent and those parties.

Yes. There are certain restrictions on the re use of company names, which forms part of our initial advice meeting.

If you have taken a bounce back loan there are no personal guarantees. However, if you have misused Bounce Back Loan funds you may be held personally liable for the balance of the loan or for any payments which are deemed not business expenses.

There are also implications where the amount of the loan obtained was more than the company was entitled to.

My accountant referred me to DCA when I was presented with a large PAYE demand from HMRC.

I tried to arrange a payment plan with them and I was unable to do so.

Luke had a meeting with me and my partner and discussed the options available and before we put the company into liquidation.

Anonymous
Everything was dealt with promptly, very happy with the service and always able to contact Luke and Keely.
IVA Client
DCA are absolutely fantastic and professional and I felt I was able to contact them at anytime.
IVA Client
I know Debbie and Luke Cockerton very well. They are my favourite insolvency people mainly because they actually help my clients rather than just bayonetting the wounded and stealing their gold teeth as some insolvency people seem to do.
Accountant Contact
I benefitted directly and notably by the experience and professional knowledge applied without hesitation to my problems by the staff of DCA within a most friendly operation. The situation was dealt with efficiently, courteously and sympathetically to my personal position.
IVA Client