Creditors voluntary liquidations
Creditors' Voluntary Liquidation "CVL" is the process where the directors of an
insolvent company can voluntarily take steps to wind up the company. The directors
call meetings of the company's shareholders and creditors to consider resolutions to
wind up the company and to appoint a liquidator.
WHEN IS A CVL USEFUL?
When a company is insolvent and no longer has a viable business worth saving. For
example:
• A company which has insufficient sales to cover its overheads and cannot continue to
trade.
Insolvent, what does this mean?
S123 IA86 sets out the definition of insolvency which includes:- Creditor(s) are owed
more than £750 and have either served a 21 day demand which has not been met or
judgement has been given or it is proved to the satisfaction of the Court that the
company cannot pay its debts as they fall due, or the company's liabilities exceed its
assets including contingent liabilities.
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