A Creditors’ Voluntary Liquidation or CVL is the process that enables directors of a company to formally close an insolvent company. The main benefit of this process is the ability of the directors to nominate their own liquidator. This is where a Creditors Voluntary Liquidation differs from the Compulsory Liquidation process. Once appointed, the liquidator will deal with realizing any assets of the company and distributing them among the creditors. This read offers information on what really is Creditors’ Voluntary Liquidation.
There are many reasons that a company should go through a CVL. Some of these reasons include:
The company is unable to pay the rent. Hence, the landlord may have appointed bailiffs to seize the assets of the company.
The company has not paid the dues to the HM Revenue & Customs departments. As a result, the company has been issued a winding up petition.
A trade creditor may have sent a statutory demand or winding up a petition to the company. The company is not in a position to pay this amount. Hence, they wish to place the company into a Creditors’ Voluntary Liquidation compared to a Compulsory Liquidation.
The company’s liabilities may exceed its assets. Since the losses are increasing and there is no turnaround in the good fortunes of the company, the directors intend to place the company into a Creditors’ Voluntary Liquidation.
The ability to trade is badly affected due to a significant shift in the company’s industry.
The company has undergone bad debts and the trade creditors are demanding payments.
These are some of the most important reasons for a company to go through a CVL. There are six stages to the process of a CVL. The first stage is a meeting between the Board of Directors’ of the company. Next, there is a period in-between the directors’ meeting and creditors’ meeting. The 3rd stage is the shareholders meeting while the 4th stage is the creditors’ meeting. The 5th stage is the company in liquidation, and the final stage or 6th stage is the final meeting of the members and creditors. These are the six stages that precede a CVL.
A company needs to choose a professional insolvency practitioner when considering a CVL. With so many professionals on the market, how can you pick the right professional? Like choosing any other professional on the market, you have to do the homework when picking the best insolvency practitioner on the market. The World Wide Web is a great place to do your homework in this regard. Check out Google and Yahoo for the best insolvency practitioner in your area. You will come across a host of practitioners in the area for such a search. Compare the services offered by these professionals against their prices to decide on the best practitioner. You can easily find the right professional for the job this way.
The aforementioned read offers information on the process of creditors’ voluntary liquidation, and how you should find a professional insolvency practitioner on the market.