Creditors’ Voluntary Liquidation (CVL) is a procedure whereby the directors of an insolvent company can voluntarily take steps to wind up the company. A CVL is designed to realise the assets of the company and distribute proceeds to creditors. CVL’s are the most common form of insolvency in the UK.
How does it Happen?
The directors of the company resolve to put the company into liquidation and instruct an insolvency practitioner to convene a meeting of the shareholders (to place the company into liquidation) and invite creditors to appoint a liquidator using a decision procedure. The shareholders’ meeting and the decision procedure are usually held on the same day, although the decision procedure can be held up to 14 days after the shareholders’ meeting takes place. In the intervening period, the liquidator appointed at the shareholders’ meeting has limited powers.
The directors of the company have a duty to prepare a statement of affairs, and a report on the company’s history and reasons for its failure and send these to creditors. This is a job which PBC Business Recovery & Insolvency can undertake on behalf of the directors.
The Liquidator’s Role
The liquidator takes control of the company’s affairs and all of the powers of the directors cease. The liquidator has the following duties:
- Realisation of the company’s assets.
- Distribute monies after liquidation costs and expenses to the creditors.
- Compile and make a submission on the directors’ conduct, in accordance with the Company Director Disqualification Act 1986, giving their view on the conduct of those persons who had been a director of the company in the period of three years prior to the liquidation.
- Prepare annual reports on the conduct of the liquidation until the liquidation is finalised
- Provide creditors with a final account and report of the liquidation.
What Services can PBC Business Recovery and Insolvency Undertake?
PBC Business Recovery and Insolvency can undertake the following services:
- We can advise directors whether a CVL is appropriate.
- Where appropriate, we will firstly assist the directors with the preparation of their report and statement of affairs.
- We will then act as liquidators.
- We can act on behalf of creditors or shareholders concerned about a company and if appropriate advise creditors how to respond to paperwork issued by other insolvency practitioners.