Creditors Voluntary Liquidation
A Creditors Voluntary Liquidation (CVL) is the formal winding up of an insolvent company which is commenced on a voluntary basis by the directors of a company. This solution is appropriate when there is no other option than the company ceasing to trade and being wound up. A CVL is under the effective control of the creditors, who can appoint a Liquidator of their choice. The CVL is the most common way for directors and shareholders to deal voluntarily with their company’s insolvency. The directors would instruct an Insolvency Practitioner to assist with the convening of meetings of shareholders and creditors. The shareholders would place the company into liquidation and appoint their nominated Liquidator, it is then unto the creditors to either confirm that appoint or put forward an alternative nomination. In a CVL, assets are realised and sold with a view to paying a dividend to creditors where possible.
If you feel that your company cannot continue to trade without worsening the position of its creditors then it may be time to place an insolvent company into Liquidation. Your company is insolvent if its liabilities exceed its assets, and/or it cannot pay its debts when they fall due, and there is no prospect of the company continuing to trade. At DFW Associates, as Licenced Insolvency Practitioners, we can accept appointments as Liquidators and use our extensive experience to secure the best outcome for all stakeholders.
Members Voluntary Liquidation
A Members Voluntary Liquidation (MVL) is the formal winding up of an solvent company by the directors and shareholders. The process is commonly used following the sale of a business or the closure of a company upon either retirement or reaching the end of its useful life.
The Liquidator realises the company assets, settles any creditor claims and distributes the remaining assets to shareholders. If the value of the capital to be distributed to shareholders exceeds £25,000 then the company must go through the formal MVL process. If the capital assets are less than this sum then the funds can be distributed and the company struck of without the necessity of injuring the costs of Liquidation.
MLV’s may also be utilised in the reorganisation of a group of companies under Sections 110 of the Companies Act for tax purposes.