What is creditors’ voluntary liquidation (CVL)?
- A procedure instigated by the members of an insolvent company, by which the assets of the insolvent company are sold, and the proceeds distributed to the creditors
- At the end of the liquidation, the company is dissolved
- The process is managed by an Insolvency Practitioner who is appointed as liquidator
How does a company enter CVL?
A company enters CVL if its members pass a special resolution that the company be wound up (section 84 IA 1986 and section 283 Companies Act 2006).
| Advantages | Disadvantages |
| Directors have more control | Closure of company |
| Staff (including directors) can claim redundancy pay | All staff will be made redundant |
| Outstanding debts are written off | Danger to directors if they have entered into personal guarantees |
| Legal action is halted | A CVL is a public process |
| Allegations of wrongful trading are reduced | |
| Low costs | |
| Avoid a court process |
