How much does a Creditors Voluntary Liquidation (CVL) cost?

A CVL can begin relatively quickly once the decision has been made and a liquidator is appointed. From that point, the company is in a formal liquidation process and the insolvency practitioner takes control of dealing with the company’s affairs, including its assets and creditor claims, so directors are no longer trying to manage those issues in the normal course of business. The full liquidation usually takes longer, because the liquidator must finish winding up the company’s affairs before the company can be dissolved. Once the final account is filed, the company is normally dissolved three months later.

A CVL can provide a formal way to close a company that cannot pay its debts and is no longer viable. It can help by taking the process out of day-to-day firefighting, putting a licensed insolvency practitioner in charge, and dealing with the company’s debts and closure through a proper legal process. However, a CVL also has drawbacks, including the company being closed, possible employee redundancies, and some personal liabilities may still remain.

When a company enters a CVL, it is placed into a formal insolvency process so it can be closed properly. A licensed insolvency practitioner is appointed as liquidator to deal with the company’s affairs, which may include gathering information, realising assets, notifying creditors, and bringing the company to an orderly close. For directors, a CVL provides a structured way to deal with an insolvent company where there is no realistic prospect of recovery.

A CVL is a formal insolvency process used to close an insolvent limited company. It is usually considered when a company can no longer pay its debts and there is no realistic prospect of recovery. For directors, a CVL can provide a structured way to deal with the company’s debts, bring creditor pressure to an end, and close the company properly with a licensed insolvency practitioner appointed to handle the process.

Yes, in some cases it is possible to buy back some or all of the business or assets after CVL. However, this is not something directors can simply do themselves once the company enters liquidation. The liquidator manages this process, and any sale must be handled properly, at the right value. For directors, the practical point is that buying back the business or assets may be possible, but it has to be done through the liquidator and structured correctly.

When a company enters a CVL, employees are usually made redundant because the company is being closed. They may be able to claim certain statutory payments, including redundancy pay, unpaid wages, holiday pay and statutory notice pay, subject to eligibility and statutory limits. If the company cannot pay those amounts because it is insolvent, qualifying claims are usually made to the Redundancy Payments Service (RPS). In some cases, where the business or assets are sold and trading continues through another company, employee rights may be affected by TUPE, but that will depend on the circumstances.

Possibly. If you want to continue the trade through a new company, or through another company you already own, it may be possible for employees to move across with the business. That will usually depend on whether the business, or part of it, is genuinely being transferred and continuing in the new company. If it is, TUPE may apply and the employees connected to that part of the business may transfer with their existing employment rights. If not, the employees are more likely to remain with the old company and be dealt with through the liquidation instead.

You should consider a CVL for your company when it can no longer pay its debts and there is no realistic prospect of recovery. This may be the case if HMRC arrears are building, creditor pressure is increasing, legal action has started, or the business is only continuing by delaying payments it cannot afford to meet. For directors, taking advice at this stage can help you understand whether a CVL is the right option and reduce the risk of the position getting worse.

In some cases, the cost of a CVL can be paid from the company’s own assets. If there is enough value in the business, those funds may be used to cover the liquidation costs. If there is little or no value available, directors may need to contribute towards the cost so the company can still be placed into liquidation and dealt with properly.

As a director of a company in a CVL, your main duties are to act carefully once insolvency is apparent, avoid worsening creditor losses, and cooperate fully with the liquidator.