John A Waller
Updated: October 11th, 2021
What Is A Creditor’s Voluntary Liquidation?
What is a ‘Creditor’s Voluntary Liquidation CVL’?
CVL: When a limited company stops trading and its assets sold to raise cash.
A CVL is voluntary liquidation.
Creditors Voluntary Liquidation Meaning
A CVL (or voluntary liquidation of the company) is when the directors of a failing company, with the agreement of shareholders, voluntarily decide to liquidate the company to repay their debts. This is distinct from compulsory liquidation & winding up petition, where the creditors decide to liquidate the company, not the directors.
A CVL enables company directors to close a business formally when it is in a distressed financial position.
A CVL procedure closes an ‘insolvent company’ voluntarily. A legal insolvency procedure involving directors of an insolvent company who have voluntarily chosen to guide their company to an end by winding the company up.
The records show that CVL remains the most common form of liquidation directors use in England and Wales while legally closing the business.
Adopting CVL allows company directors to deal with aggressive creditor action while avoiding compulsory liquidation. For further reading, please view what is a compulsory liquidation?
Directors of the company maintain the opportunity to appoint their preferred liquidator.
What does liquidation mean?
The term liquidation in a CVL means the process of closing a business and distributing its assets to creditors of the company. Liquidation takes place when a company is insolvent, remaining unable to pay its debts as and when they are due. As company operations end, any remaining assets are realised to pay creditors and shareholders, in order of priority.
A liquidation may also exist for a solvent company that can pay all its debt using a member’s voluntary liquidation (MVL).
How may HBG Advisory Help?
HBG Advisory has licensed insolvency practitioners regulated with the Insolvency Practitioners Association available to prevent further damage to the company, while importantly protecting its creditors.
However, you must check if your company is subject to any retention of title UK and insolvency clauses? Then evaluate your companies financial position.
Once you have established your company’s position. If insolvent, directors MUST not delay in acting, as this may impact directors’ liabilities if ignored.
An example of the most common mistake we encounter; directors paying staff their final wages out of their pocket. So, if the company does not have enough capital, the company? Then the Government pays unpaid wages and redundancy payments.
HBG Advisory will advise and assist any employees that require assistance with this process.
Who initiates a CVL?
A CVL remains initiated by a director or directors of the company. A licensed insolvency practitioner conducts the liquidation. A CVL commences from a voluntary decision by the directors of the companies, unlike compulsory liquidation.
How do I liquidate my limited company?
Directors of a limited company commence a CVL. Company directors have directors’ duties and responsibilities to inform the company’s shareholders that the company remains no longer viable, as it is insolvent, so they must stop trading.
Shareholders then appoint a licensed insolvency practitioner to call a creditors meeting as soon as possible (usually 21 days notice is required, but it’s usually 14 days). At this meeting, the creditors vote to liquidate the company. And approve the liquidator. Meetings typically held virtually, unless:
- 10% of creditors in value or
- 10% of the creditors by number or
- 10 different creditors request a meeting physically.
Then we can meet up. But, the Coronavirus pandemic impacts physically meeting.
Voluntary liquidation can help you end the worry. The process stops creditor pressure immediately, allowing directors to relax and move on with their life.
Agreeing to a Liquidation
Before agreeing to a liquidation, better options may however be available. So, before you consider closing down your company, please contact HBG Advisory to further expand on your available opportunity. Ask for a Pre Liquidation & Review Planning meeting. For a robust professional assessment of your company’s position, please call 0800 612 5448.
A licensed insolvency practitioner acts as the company’s liquidator to assist directors in all matters required to commence the liquidation. To view our team of insolvency practitioners, please view ‘The Team at HBG Advisory‘.
For further help and assistance, please read ‘What is Limited Liability‘.
Liquidation of an Insolvent Limited Company
Liquidation of an Insolvent Limited Company can be voluntarily actioned by directors of the company.
You can choose to liquidate your limited company (also called ‘winding up’ a company).
The company will stop doing business and employ people. The company will no longer exist as soon as it is removed from Companies House (“struck off”).
When liquidating a company, its assets are used to repay its debts. Any remaining money goes to shareholders. You will need a validation order to access your bank account.
If this money has not been shared between shareholders by the time the company is removed from the register, it will go to the state.
Can a Creditors Voluntary Liquidation be reversed?
It is impossible to reverse a CVL once a company has been removed from the company’s register, at companies house. However, the former directors of a liquidated company can purchase the assets of the newly-defunct business – whether stock, premises or its former trading name.
Can Company Directors be held personally liable?
Yes, they can if, as part of the liquidators duties, they witness acts of wrongful trading, misfeasance or fraudulent activity.
However, normally no such activity by directors is evident. Therefore, the directors are not liable for dents of the company, as they are a separate legal entity.
Secured and preferential creditors paid before unsecured creditors in a liquidation. Unsecured creditors are treated the same. If there’s enough money after we pay secured and preferential creditors, the remaining funds are distributed to the unsecured creditors after we pay our costs. If you’re an unsecured creditor, you can write the unpaid debt in your accounts, and claim relief from VAT on Bad Debts notice from HMRC 6 months later.
Voluntary Liquidation Creditors
Many people refer to this form of insolvency as Voluntary Liquidation Creditors. They, though, are both the same.
Process of insolvency as a CVL.
To activate a voluntary liquidation, the board therefore requires the approval of the shareholders first.
What is voluntary liquidation of a limited company?
A voluntary liquidation of a limited company is another term for directors wishing to close their company voluntarily. So the process is the same as voluntary liquidation of creditors. Used when shareholders decide to liquidate their company, though it has sufficient assets once realised to pay creditors,
Termination of the Limited Company
As a voluntary liquidation terminates a limited company forever, the actual legal entity. Therefore, the board needs to understand that the company is no longer required for trading purposes, and assets will be sold, and all creditors settle in full. The action is voluntary and not compulsory by creditors using the courts to act.
When the debtor acknowledges their company’s position, it may no longer trade due to adverse cash flow. They therefore request help to sort the problem out without intervention from a creditor. They however act voluntarily.
The idea of voluntary liquidation is to finish a company’s operations, deal with its financial affairs, and then break up its corporate structure while paying creditors.
So, the courts then do not order voluntary liquidation, but it requires the companies’ approval along with the board of directors.
Suppose it was carried out correctly and at the earliest warning signs. Directors remain, therefore not required to pay the fees to liquidate the limited company.
HBG Advisory always strives to ensure a company liquidation self-funding.
A common misconception is that if the court liquidates a company or voluntarily liquidates, a director remains required to pay the liquidation personally.
If acted upon early, the insolvency procedure may therefore be funded by the realisation of company assets.
Difference between members and a creditors voluntary liquidation
A Members Voluntary Liquidations MVL applies to the closure of a solvent limited. .
A Creditors Voluntary Liquidation applies to companies insolvent. i.e. Unable to pay its debts as and when due, or liabilities exceed its assets.
What is a Creditors Voluntary Liquidation? – Definition.
CVL is a formal company closure insolvency process. Company directors then instruct a licensed insolvency practitioner to ensure their insolvent limited company is therefore officially closed.
So before agreeing to arrange a Liquidation, explore the financial position of the company and finance options available. Perhaps a Company Voluntary Arrangement CVA can help the company trade? If not, an administrator can allow the sale of the business, enabling better returns for creditors and jobs saved. Even considered a pre-pack administration, the directors then consider buying the company’s assets while saving jobs.
Remember, a CVL closes a business forever (assets liquidated) has therefore a substantial impact financially on shareholders and creditors, unless they have some form of security. Further, if directors have conducted themselves legally, they remain not personally liable for company debt. (Providing no personal sureties given). So directors must not take the risk of wrongful trading lightly.
Company directors have no capacity in UK law to carry out closure themselves when insolvent. Liquidation advice should be however from a licensed Insolvency Practitioner.
Can suppliers take back unpaid goods?
Can you have retention of title claim in a liquidation?
If a buyer enters administration or liquidation and holds goods supplied under a retention clause, these clauses will generally be effective.
How are insolvency practitioners appointed liquidators in a CVL?
The liquidator must be a licensed insolvency practitioner. The company directors usually meet with an insolvency practitioner once they become aware of serious financial difficulties. The directors must not neglect any sign of the company’s insolvency, as it may expose directors to trading claims while knowing the company was insolvent. Directors’ duties and responsibilities remain essential for them to carry out.
Directors have two critical areas of concern as an officer of a limited company.
- When the company is solvent, they have a duty to shareholders to avoid insolvency.
- When insolvent, they must protect the interests of creditors over shareholders.
So, a licensed insolvency practitioner will inform a company of all the various forms of insolvency processes that the company can take, which is best for the creditors of the company, primarily the business and directors. Further, options exist, which may be better suited, like appointing an administrator.
Suppose directors place their company into liquidation. Then they have the opportunity to appoint a trusted insolvency practitioner who has the strength to put it into liquidation. Therefore, wishing to have someone manage the process, they can work with and appreciate the challenges you faced, and whom you believe will consider their situation. Thus, the same insolvency practitioner advises the company’s directors to be appointed liquidators and responsible for realising company assets and collecting all money due to the company. Once completed, they may commence distribution to agreed creditors.
A CVL occurs when the company passes a special “Extraordinary” resolution at a general meeting to say it can’t continue in business because of its liabilities, and requires a liquidator to wind it up.
Company law in the UK requires a special or ‘extraordinary’ resolution passed by 75% of the company’s shareholders (by the value of shares).
Considering a CVL
If you have a business (Limited Company) insolvent, you, as a director of your business, are therefore a duty to ensure you protect the interests of your company’s creditors by seeking insolvency advice. Further, as a director, you remain required to review your company’s position and consider ways other than a liquidation to ensure its viability and its creditor’s position.
A CVL may however be considered the wrong action for creditors and the company. Therefore, advice from a licensed insolvency practitioner remains essential.
Reviewing your business often highlights other opportunities avoiding the CVL approach:
- Carry our informal workout
- Consider company restructure and restart business utilising a:
- Appointing an Administrative Receiver.
Please do not assume all is lost, and only consider under pressure, a voluntary creditors’ liquidation. Consider the position in which your business is and how it will move forward. Only then, if you believe you have an insolvent company and are no longer viable, should you commence your company’s liquidation? HBG Advisory will explore avenues available to your business. Therefore, please arrange initial FREE insolvency advice. Other options remain open. – identify opportunities other than a liquidation of the company – and agree on a plan for the way forward.
If you would like a CONFIDENTIAL FREE meeting to explore your company’s issues and options, please contact John Waller on 0800 612 5448 or email [email protected].
Unsecured creditors of a limited company in liquidation have the right to form a creditors liquidation committee. Therefore, they will receive regular updates from the appointed liquidator.
What is a CVL Liquidation and how can it help?
Insolvency for limited companies in the UK offers various formal insolvency procedures to either protect or close companies.
The process used to protect companies by turning around their situation includes administration and CVAs. Those companies requiring closure use liquidation, as the business is no longer viable (Insolvent). (Liquidations) allows the former directors to start afresh and draw a line for the creditors, allowing a possible payment should the company assets allow.
A CVL process closes a limited company while dealing with creditors who remain unpaid in whatever capacity. The appointed liquidator will ensure all the companies assets are realised to enable maximum payout to the creditors. However, often shortfalls occur, causing these debts to be written off. However, if directors have signed personal guarantees, they shall therefore be held responsible for payment.
A CVL is used for the closure of an insolvency limited company. However, a Members’ Voluntary Liquidation (MVL), though voluntary, requires the company to be solvent and is therefore used for purposes other than the inability to pay creditors.
What’s the Job of a Liquidator in a Creditor’s Voluntary Liquidation (CVL)?
To be appointed liquidator in the UK. The law requires the person appointed as a liquidator to be a licensed insolvency practitioner regulated by a professional body. Once appointed, the Insolvency Practitioner has therefore a duty of care to ‘act in good faith at all times while in office, and work to maximise the return for company creditors, so they can therefore receive repayment.
The liquidator’s primary role is to focus on the realisation of the company’s assets to distribute the proceeds to the company’s creditors.
The licensed insolvency practitioner however has the authority to investigate the behaviour of a director of the company before his appointment. If the evidence is found of wrongful trading, then commence prosecution and refer matters to The Insolvency Service. All liquidators are then charged with such duties, and if they fail to carry out such matters, they themselves face investigation.
The ever-changing impact of the Corona19 virus pandemic has hit industry and trade in the UK. Many however face financial ruin or mounting financial distress. While happening, can creditors take action by using the courts to collect money while under lockdown?
UK’s government faces challenging times. They are introducing new rules to mitigate the severe financial crisis; UK businesses endure. HMGOV hopes the response helps companies continue trading while restructuring and rescue plans are implemented. Therefore, saving jobs and refloating the UK economy.
For further reading, please check out ‘Bounce Back Loans and Liquidation‘.
Government’s new measures to help businesses protect against creditor claims.
Proposals for rule changes await parliament. So they include:
- Supplies require protection
- Moratorium protection.
- Introduction of a restructuring plan
Protection from creditor pressure.
Selling to a connected party.
Former directors of a failed company are legally permitted to consider buying back their former business and assets in a creditors’ voluntary liquidation. HBG Advisory will provide you with advice and assistance on this process.
Why Choose A CVL?
The reasons and causes vary. During the free initial consultation, you will have to investigate why the company faces closure. It may be extreme pressure from the HMRC for tax arrears, which remain overdue, third party legal action by trade suppliers, or the business has sustained significant adverse debt, therefore seriously affecting cash flow?
Issues can cause companies to cease trading. When cash dries, the company fails to pay its creditors. Directors must then concede that the company may be insolvent, as it is unable to discharge its debts, as and when they fall due, or if the business liabilities exceed its assets.
You may then choose a CVL for your company because:
- Your business is insolvent on a balance sheet test;
- It has tax bills; it may then not repay;
- The court proceeding may be pending;
- The company may have received a winding-up petition?
- HMRC Time to pay arrangements failed or arrears;
- Unable to afford the time to pay;
- Build up of debt enforcement notices;
- Joint VAT and PAYE arrears;
- HMRC enforcement causes business to cease trading;
- Debts owed by the company exceed assets and available future cash flow;
- Substantial rent arrears. Landlord threatening re-entry;
- Build up of County Court judgements;
- Substantial insurance arrears;
- Business debt may then be no longer manageable;
- Council tax arrears;
- The industry has changed;
- Not able to afford to pay creditors.
Company directors experiencing financial difficulties
Often, company directors themselves fall into financial difficulties. However, the cause may directly be related to a poor performing company.
It may have:
- Absorbed all personal monies of the owner-managed limited company;
- Court action pending, with not being able to pay your tax bill;
- May you have used company cash to pay income tax arrears;
- Debt advice pay has meant you have entered an individual voluntary arrangement;
- You may face bankruptcy proceedings, not able to trade on, and company insolvent?
Thinking Of A CVL – Closure Options?
Insolvency Planning & Review
Company directors should not rush into liquidation of your limited company. You should consider a pre-liquidation strategy meeting. A pre-liquidation meeting is essential so that you can understand and agree on the outcome. A professional review creates value.
The report should then be an important fact find:
- You should ensure you compile an enquiry pack;
- Review the company’s last five years of accounts filed;
- Carry out a simple audit of the charges registered over the assets of the company;
- Examine previous forecasts prepared on “what if” bases;
- Review of the company’s customers and its position in its market;
- Highlight the company’s critical processes adopted and improvements needed;
- Appraise director’s retirement strategy;
- Balance directors loan accounts;
- Ensure all options available.
The evaluation may however highlight a different strategy than a CVL.
If the pre-liquidation planning review letter recommends a CVL and sets up a Phoenix company, then that letter might ask:
- How to finance the turnaround?;
- Can you use the company name in the Phoenix company;
- When to call the section 100 meeting of creditors for a CVL.
Advantages And Disadvantages Of A CVL?
- Rapid process normally;
- Employees may claim their unpaid wages and redundancy pay quicker from the government;
- Company directors hold more control than a compulsory liquidation;
- Creditor pressure removed immediately;
- Risk of wrongful trading potentially reduced;
- Opportunity to buy back company assets;
- You may become a director of a new co;
- As a long term director, you may claim redundancy (if on the payroll).
- Every liquidation requires investigation into how the directors conducted themselves (SIP 2);
- Directors give personal guarantees;
- The Liquidation advertised in the Gazette;
- Shareholders unlikely to receive any returns on investment;
- Employees may claim their unpaid wages and redundancy pay quicker from the government. (Redundancy Payments Office)
Can I Liquidate My Limited Company?
No. For an insolvent company closure, however, a licensed insolvency practitioner takes the appointment.
When Is A “CVL” Appropriate?
A CVL is appropriate when a company is proven insolvent. The company can either no longer pay its debts as and when they fall due, or when its liabilities amount to more than the assets on the balance sheet.
How Long Is The Procedure For A CVL?
Placing a company into a CVL is usually a quick process and can be actioned therefore within ten working days.
How much to liquidate? The process requires the appointed insolvency practitioner to realise the company’s assets, although this can be lengthy and depends on the type of asset, the type of business, its size and spread.
As with everything in life however. How long is a piece of string?
Therefore, the cost depends on many determinants:-
- The size of the company;
- Value of company assets;
- How many creditors;
- Size of the workforce;
- Number of locations;
- Hazard issues;
- Is the limited company solvent or insolvent?
As you can see, many factors affect the cost. The most important, though, is its solvency. This then affects the type of insolvency, as it determines the type of voluntary liquidation procedure it must go through.
It may be a:-
- Members Voluntary Liquidation. – Solvent
- Creditors Voluntary Liquidation. – Insolvent
To carry out a basic Member, Voluntary Liquidation can cost from £850 plus vat.
For simple creditors, voluntary liquidations cost £3,000 plus vat.
All types of liquidations are subject to the points above and do not include extra disbursement costs.
For further reading, view ‘how much to liquidate.’
Unsecured creditors have the right to form a creditors liquidation committee, ensuring they receive regular updates from the liquidator.
The Powers of the appointed liquidator
Liquidator powers are broad, and directors remain no longer in control of the company, but legally obliged to cooperate with the liquidator, regardless of whether it is in their financial interests. Should the directors have personal guarantees to secure company debts, it is in their interests to assist the liquidator in their collection of outstanding monies.
Choice of Liquidator
Should the creditors’ choice of liquidator be different from the shareholders, the creditors’ choice prevails.
For further reading on how a liquidation for an insolvent company impacts shareholders. Please view ‘What happens to shareholders in liquidation.
Commencing A CVL – How do I liquidate my Limited Company?
Stages of a CVL?
- Arrange a board of directors’ meeting or sole director, and discuss and agree on a statement of affairs.
- Call a shareholders meeting.
- The creditors’ meeting.
- The company is now in liquidation.
- Terminating the Liquidation.
The directors of the company require liquidation. They have a shareholders meeting and confirm the company is insolvent and has no plan to move forward. The company then ceases to trade under the instructions of the directors.
Shareholders agree to appoint a licensed insolvency practitioner to arrange a meeting of creditors, giving fourteen days notice minimum. This then allows formal insolvency procedures to commence. The company then needs to arrange to stop the trade of any sort.
Then, the available creditors vote to appoint a liquidator.
The Liquidator will change the registered office to his.
Recent changes allow virtual meetings. A formal actual group meeting should go ahead if:
- Creditors require ten per cent of the company’s creditors to vote for one;
- Ten creditors individual vote for one;
- The creditors require ten per cent of the amounts of creditors. If any of the above apply, creditors can attend a meeting before the pandemic. During the current pandemic, no physical meetings allowed.
Do I Need To Attend Any Meetings?
The directors hold a board meeting to consider recommending liquidation to the company’s shareholders.
Then follows an extraordinary general meeting of the shareholders, so members can pass resolutions and place the company into liquidation. Also, at the meeting, they vote to nominate a liquidator.
As of April 6th 2017, it is no longer an automatic requirement of the Insolvency Act 1986 (as amended) to hold a physical meeting of creditors. Depending upon the Liquidation circumstances, the member’s appointed Liquidator may be ratified as the creditors’ Liquidator by Deemed Consent order or holding a virtual meeting.
A physical meeting of creditors occurs if requested explicitly by either creditor representing ten per cent of the total creditor debt, ten per cent of creditors’ amounts, or by ten creditors in number.
What do we do as directors?
Once the company is “in liquidation”, the directors must fill out a detailed questionnaire for the liquidator. They MUST provide all the company’s books and records to the liquidator. After there is a creditors’ meeting which a director must attend. After that, little else is required. You must comply with the liquidator’s request for information; it is a criminal offence not to do so.
Although shareholders liquidate the company, creditors ratify the liquidator. This can be achieved either through the Deemed Consent provisions or through a statutory Decision Procedure. Deemed Consent Following the implementation of the Insolvency Rules 2016, the creditors’ confirmation of a liquidator’s appointment can be obtained via the Deemed Consent procedure. In these circumstances, creditors will be furnished with notice of Deemed Consent at least 3 business days before the Decision Date, and at least 1 business day before the Decision Date will receive a report which includes the following information:
Will The CVL Be Advertised?
Notices of the Liquidation require advertising in the London Gazette (Insolvency). However, this is the only place the Liquidation remains advertised, unless the Liquidator believes it is necessary to place additional advertisements.
Is It Possible to Reverse a CVL Process?
In simple terms: YES
THEREFORE, a CVL is a course of action to prevent creditors’ conflict. An example is a winding-up petition.
However, if the company can pay off its debts, this would return the company to solvency. Then, the process may be halted, provided company assets are not sold and the company remains registered at the company’s house.
If then, if the company has been struck off. Therefore, you’re required to reinstate the company through a formal application, known as an administrative restoration.
Liquidators have practical and statutory duties to adhere to in the ordinary course of a liquidation. These duties then include:
- A CVL, once appointed, therefore, closes the company with immediate effect, deals with outstanding company debts, asset realisations maximised so that creditors receive payment. Usually, when a company enters a CVL, there remains a shortfall to creditors; this may be written off when the company liquidates.
CVL’s remain only for insolvent companies. When a company is solvent, however, it requires closure. Then to realise assets and cash, members voluntary liquidation (MVL) is the appropriate option.
As a director (director redundancy), remember you’re entitled to claim redundancy.
Once the liquidator’s appointment remains approved, creditors can appoint a liquidation committee (min. 3, max. five, creditors). Unless a proxy states otherwise, any proxy holder at the meeting may represent his company as a committee member without further sanction. The first meeting often follows directly after the creditors’ meeting. The intent to confirm the meetings and other issues. The duties of the liquidation committee involve:
- Countenancing the continuance directors’ powers, if required.
- Agreeing to the appointed liquidator’s fees.
- Confirming payment of creditors in full.
- Approving settlements with company creditors.
- Acknowledging the conduct of the liquidation reports from the liquidator.
Someone can represent another member of the committee in committee meetings, resign and reimburse reasonable travel costs.
Am I Able To Administer Another Limited Company?
A liquidation enables directors to close the original insolvent company and start a new company. This, though, may only be allowed if no disqualification order remains issued against the directors. Directors must note that one of the prime duties of the Liquidator is to examine the previous actions of the directors. If there has been, the directors may face disqualification for up to 15 years.
If the directors of an insolvent company decide to buy back the company’s assets, usually this is done through a pre-pack liquidation. The company’s assets are sold to a new company with a new name, but can be the same.
A pre-pack liquidation is when you sell the assets before the company liquidates. An independent, suitably qualified RICS valuer values assets to protect creditors (so assets are not sold undervalued).
Section 216: The Re-use Of A Company Name
Once a company is liquidated and a former director, specific laws govern and restrict your involvement with companies with a similar or same name. Contravening them is however a criminal office, and possibly punishable by fines, imprisonment or even both. For further reading, view “The provisions of Insolvency Act 1986, sections 216 and 217.
Company Creditors repayment?
The Insolvency Practitioner has assets of the company independently valued, then realised. The money then is distributed to creditors in order of priority.
The liquidator’s fees come first, followed by:
- Secured Company Creditors;
- Creditors Holding a Fixed Charge;
- Creditors with a floating charge;
- Preferential Creditors of the company;
- Unsecured Creditors;
- Shareholders of the company.
Will liquidating my company stop my stress?
Voluntary Liquidation allows you to close your limited company promptly and formally. Once the liquidation process is complete, you can become a director of another company, but there are restrictions on the company name’s re-use. You are no longer entitled to trade under an identical or similar name – this could take you to court. It is worth mentioning that if you have been a director for many years and are on the payroll, you can demand dismissal from the government like any other employee. If in doubt, please contact HBG Advisory.>(CVL) – When Is The Liquidation Completed?
The liquidation completed when every asset of the company realised, all creditors’ debt agreed, and net realisations (after expenses of the liquidation) distributed to the creditors of the former company.
To cease the liquidation. The Liquidator therefore calls a final meeting of creditors and shareholders, at which the final accounts detail receipts and payments of the Liquidation, with an attached report regarding the conduct of the Liquidation and if matters are finalised.
What happens to employees?
Unfortunately, all assets will be sold during the liquidation process, and the workers’ jobs will be laid off. If the funds are insufficient to pay employees, they, like the directors, can claim from the National Insurance Fund subject to meeting criteria,
What Happens To A Company After Insolvency?
If your company is in an insolvency procedure, then:
- All CCJ, statutory demands or petitions to wind up cease;
- Banks usually freeze accounts, pending contact from an insolvency practitioner;
- Suppliers and customers terminate relationships and seek new business elsewhere;
- Lenders then call in loans & security;
- Director’s conduct is then investigated, including wrongful trading.
- Remember, directors are entitled to REDUNDANCY CLAIM.
Once all assets have been realised, all creditors’ claims have been determined, liquidation expenses paid, and creditors claims settled wherever possible.
Creditors Voluntary Liquidation (CVL) – Why Choose HBG Advisory?
- Over the past twenty-five years, our IP’s have taken appointments as liquidators of companies from large to small, owner-managed businesses;
- We work with stakeholders to therefore enable a return to creditors;
- We then assist and advise stakeholders in the process to ensure little if any problems occur;
- Our fees can either be fixed as advertised or, in complicated cases, discussed openly;
- Confidential advice assured.
For a more in-depth guide on fees of a Creditors Voluntary Liquidation view, Guide To Liquidators Fees download on R3.
What information am I entitled to as an unsecured creditor?
Within three months after the end of the first year, each subsequent year and after the liquidation, the liquidator must convene a meeting of creditors.
Also, sending creditors a:
- Notice of the meeting;
- Receipt and payment account;
- Report explaining their conduct of the liquidation,
Are you a debtor of a company that may go into liquidation?
Can we then help?
- HBG Advisory will explain what Liquidation means;
- What then is the Liquidation process?
- We can attend the creditors meeting (if held);
- Business rescue issues;
- All aspects of corporate insolvency;
- What is voluntary liquidation?
With over 30 years of experience helping directors and business owners, HBG Advisory remains one of the UK’s most in-demand licensed insolvency practitioners. We offer directors, sole traders, and partnerships expert advice on CVLs and business insolvency in terms of the variety of options available, and can help you:
- Dealing with employees and unpaid wages;
- Deal with creditors;
- Liaise with bailiffs, solicitors and court officials;
- Securely close a company and restart;
- Provide breathing space to make informed choices;
- Obtain a valuation of assets of your business;
- Assist in securing business finance;
- Protect your family home and personal assets;
- Consult with HMRC on your behalf.
Click on Meet the team at HBG Advisory.
Contact HBG Advisory on 0800 612 5448 Seven days a week. 8 am to 8 pm or click VIRTUAL and arrange a safe, confidential virtual meeting online.