Director information hub: Creditors' voluntary liquidation (CVL)
Creditors' voluntary liquidation (CVL) is when the directors take steps to close down the company.
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Creditors’ voluntary liquidation (CVL)
If a company cannot pay its debts, the directors may look to put it into liquidation, with the agreement of at least 75% (by value) of the company shareholders.
This is known as a creditors’ voluntary liquidation (CVL).
To do this, you need the services of an insolvency practitioner.
To enter into a CVL, 75% (by value) of shareholders must agree. This is called a resolution. Following this creditors must be notified.
What happens in a CVL?
The company will be closed down in an orderly manner, which will include the liquidator:
- securing and realising any assets that the company owns – including any unpaid invoices for work completed – for the benefit of company creditors
- seeking to understand and report on the reasons for the company’s insolvency
- considering the conduct of the directors and submitting a conduct report to the Insolvency Service
A CVL is different from a members voluntary liquidation (MVL) and compulsory liquidation.