Creditors Voluntary Liquidation CVL
When a company is insolvent with no viable future, a Creditors' Voluntary Liquidation would see Shareholders place the company into liquidation
Insolvency can be defined in two ways; your company is insolvent if its liabilities exceed its assets, or if it is unable to pay its debts as and when they are due.
Numerous companies trading in the UK at present may find themselves in an insolvent position but many may still be viable businesses that are suffering from short-term cash-flow problems. However it’s time to take action if you feel that your company cannot continue trading without worsening the position of its creditors.
If you’re looking to place an insolvent company into liquidation, this process is called Creditors’ Voluntary Liquidation – known as a CVL. This solution is appropriate when there is no other option than the company ceasing to trade and being wound-up. In a CVL, assets are realised and sold with a view to paying a dividend to creditors where possible.
This route is only appropriate if your company is insolvent. For example if:
- Its liabilities exceed its assets and/or
- It cannot pay its debts when they fall due and
- There is no prospect of the company continuing to trade
At Begbies Traynor, we are qualified to undertake the role of Liquidator using our extensive experience and expertise to secure the best outcome.