The CVL procedure is the most popular mechanism for closing down and winding-up a company that is insolvent and is unable to meet its liabilities. The procedure is used where a rescue is not viable, and the company's directors have chosen voluntarily to bring the business to an end.
A CVL is initiated by the director(s) of a company who, with its shareholders, nominate an Insolvency Practitioner to wind up the insolvent company. Creditors formally ratify the appointment at a meeting of creditors, usually held within 2-4 weeks of seeking professional advice.
The liquidator must be a licensed Insolvency Practitioner who will dispose of the company’s assets and share the proceeds (after costs) with creditors in accordance with their adjudicated claims and statutory priorities.
The liquidator will also report on the conduct of the directors in relation to the demise of the company. Directors must be mindful at all times that if their company is struggling, they should not continue to trade whilst knowingly insolvent, make any preference payments or enter into any transactions at an undervalue.
Directors often worry about being able to reuse the same or similar company or trading name. This can be done, but only through certain statutory procedures. We can provide you with the guidance required to enable you to do so without risk of personal liability.
We can walk you through all the options discussed above, your responsibilities and the consequences of opting for a CVL procedure. We will assist in the preparation of the company’s statement of affairs (effectively a balance sheet), together with a report to creditors outlining the company’s position.
Please contact one of our partners for more information on +44 (0)20 8861 7575. If you prefer, please complete the form on the right, and we’ll call you straight back within 24 hours) and answer any questions you may have.