 Creditors' Voluntary Liquidation ProcedureCreditors' Voluntary Liquidation (or CVL) occurs where the shareholders, usually at the directors' request, decide to put a company into liquidation because it is insolvent. 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. Members' Voluntary Liquidation (solvent companies) Procedure A solvent liquidation is known as a members' voluntary liquidation (or MVL), in which a liquidator is appointed by the shareholders and the company's assets are sufficient to settle all its debts within 12 months. MVLs may be used for purposes of reorganisation, or in the case of owner- managed businesses to enable the shareholders to realise their interest in the company. Compulsory Liquidation Procedure Compulsory liquidation (or compulsory winding up) is instituted by an order made by the court, usually on the petition of a creditor, the company, or a shareholder. There are a number of possible reasons for making a winding-up order. The most common is because the company is insolvent. Insolvency is usually established by failure to comply with a statutory demand requiring payment within 21 days, or by execution against the company's goods being returned unsatisfied. A winding-up petition may also be presented by the Secretary of State for Trade and Industry on the grounds of public interest. In a compulsory liquidation the function of liquidator is in most cases initially performed by the official receiver. Where there are significant assets an insolvency practitioner will usually be appointed to act as liquidator in place of the official receiver, either at a meeting of creditors convened for the purpose or directly by the Secretary of State for Trade and Industry. Bankruptcy Advice If bankruptcy is the best option suited to an individuals circumstances then we are able to guide them through the process. We can advise them of their rights, help them complete the paperwork and if necessary, alleviate a great deal of stress by dealing directly with their creditors on their behalf in the run up to bankruptcy. Back to Homepage |
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