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Our most Frequently Asked Questions

If you have a specific question about a CVL that is not covered here or need further advice, please get in touch.

What does a CVL do?

A CVL is a formal way of winding up a company that is insolvent and can no longer trade. The directors of the company need to work with an insolvency practitioner and upon liquidation, a liquidator (who in most cases is the same person as the insolvency practitioner who dealt with the directors from day one) will deal with the company going forward.The directors are then able to focus on other things although they may be required to help the liquidator with queries or provide information which may help the liquidator carry out their duties.The main role of a liquidator is to turn a company’s assets into cash and if there is enough cash, make payments to those who are owed money.

Why would a company need a CVL?

A CVL is usually seen as the best way of dealing with a company that is insolvent and can no longer continue trading. The directors are able to control the process of liquidating the company and, once the company is in CVL, a liquidator will take over all company matters including dealing with post and phone calls from those owed money. It is generally viewed as a better option than waiting for a creditor to petition for a Compulsory Winding Up order.

Who can start a CVL?

A company’s directors will decide that the best option is to put the company into CVL and they will hold a board meeting to agree the course of action.The directors would then engage an insolvency practitioner to call meetings of members (shareholders) and creditors to formally place the company into CVL. It is the company’s shareholders that will need to vote at a formal meeting (either in person or by proxy) in order to pass a resolution to wind a company up.

How much does a CVL cost?

A fixed fee can be agreed based on the circumstances of the company. To get a no obligation quote now, fill in your details in our quote calculator or to discuss your position in confidence please call 0333 241 9019 to speak to one of our friendly team.

What is the alternative to a CVL?

A Compulsory Liquidation is usually started by someone owed money by a company and is a court process rather than a voluntary one. It is generally much slower, gives a worse outcome for those owed money and gives the directors no control over the process.

There may be other options available so please call us so we can discuss whether any other alternatives would be possible.

What are the obstacles to a CVL?

Although a CVL is started by directors it will usually require the full support of all directors and shareholders in order for it to go ahead. If a creditor has already started the process of applying to court for a Compulsory Liquidation, we can still help but there may be additional costs in dealing with the court application first, before a CVL can go ahead.

How long will a CVL take?

It usually takes around 2-3 weeks to get a company into CVL. Once in CVL the directors powers cease and the liquidator has various duties to perform. The duration of a CVL mostly depends on how long it will take to deal with a company’s assets and make payments to creditors.

Most straightforward CVLs (where there are little or no assets) can be completed within 8 months to a year but more complex cases can run into years if there are many assets to deal with.

What could go wrong with a CVL?

A CVL needs to be carried out by a licenced insolvency practitioner who will be regulated by a professional body to ensure that the process is dealt with properly. The liquidators have a duty to inform The Insolvency Service (which is a Government department) whether there is any evidence that the directors of a company may have acted improperly or knowingly tried to deceive or defraud creditors in any way. The Insolvency Service will look at any information which has been supplied to them, possibly contact the directors with further questions and decide whether they think a director should be disqualified for a period of time.

In addition, the onset of a CVL may prompt creditors who directors have given a personal guarantee to, to chase directors personally for their debts.

What are some of the benefits of a CVL for directors?

Once liquidators are appointed, they take over responsibility for the company which for the directors means that pressure from creditors is ended. It also draws a line under what is usually a difficult situation. Directors can start again if they wish and there is usually an option for directors to purchase assets back to continue with the business under a new company. Directors also have the opportunity to tell their side of why the company failed and are usually looked at more favourably for taking pro-active steps to deal with the company properly.

Going concern

Where a company is trading and making a profit. The business of a company can sometimes be sold as a going concern, (namely with the same trading style, employees, customer list etc.) Legal advice should always be sought by both the seller and buyer before negotiations take place.