A creditors’ voluntary liquidation or CVL is appropriate where a company is insolvent and is not capable of being rescued, usually because its underlying business is no longer considered viable. CVL is an alternative to compulsory liquidation and is instigated by the company directors’ to mitigate the risk of trading whilst insolvent.
With the assistance of an insolvency practitioner the directors will convene meetings of the company’s members and creditors. At these meetings resolutions will be considered that the company be wound up voluntarily and that a liquidator be appointed.
The duty of the liquidator is to realise the company’s assets for the benefit of the company’s creditors. The liquidator also has a duty to investigate the directors’ conduct for disqualification purposes.
If a creditor is applying pressure for payment then it is important that you seek professional advice.