Creditors Voluntary Liquidation (CVL)
Creditors’ voluntary liquidation
A Creditors’ voluntary liquidation or CVL is a voluntary process that is available for directors of a company to instigate an orderly winding up of the company. This process is normally utilised when a company is balance sheet insolvent and/or is unable to pay its liabilities as they fall due and the only option is to cease trade.
Directors should seek advice as to whether it is necessary to place a company into Creditors’ voluntary liquidation as soon as they become aware that the company may be insolvent, as failure to do so may result in claims being brought against them for breach of duties or wrongful trading.
Where a rescue is not possible, turpin barker armstrong can assist directors with the formal liquidation process. This involves convening meetings of the company's members where resolutions are proposed to wind the company up and appoint a liquidator. A meeting of the company's creditors will also be convened in order to confirm the appointment of a liquidator.
The duly appointed liquidator will then seek to realise any remaining assets of the company for the benefit of creditors. The process of placing a company into Creditors' Voluntary Liquidation is relatively straight forward and can be done in a very short space of time.
We at turpin barker armstrong have many years of experience working with directors to place their company into a Creditors' Voluntary Liquidation. Our licensed Insolvency Practitioners can assist directors throughout the whole process and are always at the end of the phone to answer any queries to make the process run as smoothly as possible.
We understand it is a stressful time and therefore offer the first meeting FREE of charge with no obligations to go ahead, we can discuss the whole process with the director to ensure it is the right decision for the company. We always suggest to seek advice as soon as the first signs of financially difficulty appear.
We always offer the first meeting free with no obligations to commit - contact us here or call us on 020 8661 7878
Andrew Bailey, one of our Insolvency Partners here at turpin barker armstrong has recorded an informative video on Director Loan Accounts and has some tips you may find helpful:
If you are tempted to take a DLA to tide you over – beware!
If a director of a company (or close family member), takes money from the company that is not salary, dividend or an expenses repayment it is very important to keep clear records of what money has been borrowed from or paid into the company. These records are known as a Directors Loan Account or DLA
An overdrawn DLA happens when a director takes out more money than they have put in. These overdrawn amounts are recorded on the balance sheet as a company asset until it is fully re-paid.
If your company is struggling financially and you have an Overdrawn Directors Loan Account, this could become a personal issue for you. Even if your company writes off your DLA.
If a company goes into liquidation, a liquidator would be appointed. It would be the liquidators duty to raise as much money as possible, by liquidating the company assets, in order to pay back the companies debts. If you have an overdrawn Directors Loan Account the liquidator would look for repayment.