Creditors Voluntary Liquidation (CVL)
When a company is facing increasing creditor pressure and is no longer viable, a CVL might be the best option to conclude its affairs.
Although Liquidation is typically considered as the end of the road it may still be possible to sell the business and assets and create employment opportunities. Is should be noted under liquidation TUPE provisions do not apply.
What is a Creditors’ Voluntary Liquidation?
A CVL is the most popular company insolvency process in the UK it can only be initiated by the board of directors. The process transfers control from the directors to the Liquidator providing relief from the stress of crisis management.
A CVL is often used as a way of concluding a company’s affairs. The assets of the company are sold by the liquidator appointed using an independent agent, and subject to professional valuation.
There are no restrictions on who the assets can be sold to, so it is possible to sell the assets to anybody including a new company that the directors or shareholders have an interest in. A liquidator does, however, have a duty to maximise the asset realisations in any liquidation estate for the benefit of the company’s creditors and, therefore, the directors and shareholders of the company entering liquidation will not get first refusal or be able to buy the assets at favourable prices.
If the directors are successful in buying back a company’s assets, there are strict rules that must be adhered to in order to ensure that the new company and its directors are fully compliant with the requirements of the law. We can help you through this process however we would recommend that you take independent legal advice. The appointed liquidator will deal with the affairs of the old company and will, if funds are available, make distributions to creditors
The process begins with a meeting of the board of directors, whereby the reasons for liquidation will be covered and authority will be given to the proposed liquidator to gather information, assist and convene the general meeting of the shareholders and the deemed consent or other decision procedure of the creditors.
The proposed liquidator will agree with the directors whether to place the company into liquidation using either deemed consent or a virtual meeting decision procedure. However, the creditors may also request a physical meeting which would supersede the other decision procedures.
A virtual meeting is one where either the creditors are invited to attend through some IT platform such as a conference call, a Microsoft Teams or Zoom meeting.
Our preferred route would be by a “deemed consent” procedure. This is where no creditors’ meeting is held but creditors are notified via correspondence that a decision is to be passed by deemed consent and that the liquidator appointed at the shareholders’ meeting is going to be confirmed as liquidator of the company. Creditors can object to this, and a physical meeting would need to be held if objections are received from the following:
- 10% of creditors in value
- 10% of creditors in number
- 10 creditors
How much does CVL cost?
Our liquidation costs are acknowledged as being very competitive in the market place. We will ensure you have direct access to our insolvency practitioner to answer your questions and agree an appropriate fee for the work to be done.
McLenan Corporate will provide the directors and shareholders with appropriate advice, always seeking in the first instance a rescue of the business, but if a formal CVL procedure is required, we will ensure that all relevant paperwork and meetings are completed efficiently and as soon as possible to move the liquidation process on.
How Can McLenan Corporate Help Me?
First and foremost, we are Licensed Insolvency Practitioners, and this is what we specialise in. We are not affiliated to any other organisation and therefore we are able to provide you with complete independent advice. We will always ensure that upon speaking with the Directors of a Company that we explore all the options that are available.
It is our priority to keep your business away from a formal insolvency procedure. If this cannot be avoided, we will determine whether Company Administration is a suitable process.
We will work closely with you to understand your business in its entirety before providing you with any recommendations. In times of financial pressure, we understand the uncertainty and issues that are being faced, so here at McLenan Corporate, we provide all our initial advice and guidance free of charge.
Only in the event of formal instruction will we begin to charge fees and these will be agreed with the client, in writing, before any work is commenced and given that our professional charges are very competitive, we are in a position to provide the necessary help that you need.
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Marathon House, Olympic Business Park
Drybridge Rd, Dundonald
Kilmarnock, Ayrshire KA2 9AE
McLenan Corporate is a trading name of McLenan Corporate Solutions Limited, Marathon House, Olympic Business Park, Drybridge Rd, Dundonald, Kilmarnock, Ayrshire KA2 9AE. Company Number SC651445.
Margo McLenan is licensed to act as Insolvency Practitioner in the UK by the Insolvency Practitioner Association.
Insolvency Practitioners are bound by the Code of Ethics when carrying out all professional work relating to an insolvency appointment.