Business Insolvency

Creditors Voluntary Liquidation (CVL)

What is Creditors Voluntary Liquidation (CVL)?

A Creditors’ Voluntary Liquidation, or CVL, is a formal process in which the directors of the company which is insolvent agree to bring its existence to an end.  It is the corporate version of a funeral.  While the name implies it’s an action taken by creditors, it’s actually the directors who start the process and who bring it to shareholders for a vote.  The process must be carried out by a licensed insolvency practitioner.

Why Choose a CVL?

Where a company has more liabilities than assets or cannot pay debts it is usually advisable to liquidate via a CVL. It is a quick way to close a limited company and to stop creditors putting business owners under pressure.

The directors and shareholders place the company into liquidation and the creditors confirm their choice of liquidator. The liquidator deals with the assets and liabilities of the company sharing them out equally between each class of creditor.

A voluntary liquidation has many benefits and allows you to comply with your statutory and fiduciary duties in relation to the company, and it may be that the assets available within your company will pay the costs of the process.

If you want to minimise your business losses and personal risk please call for an informal chat on 0345 260 0101 and ask to speak with either Jeremy Frost , Patrick Wadsted or Michelle Breslin. We cover the whole of the UK and look forward to working with you.

CVL Costs

The popularity of our MVL packages and fixed fee price levels have led us to develop similar service levels for our CVL's.

We understand our client's expect to know precisely how much they will be paying when they contact us for a quote to place their company into liquidation.

Of course the prices will range depending on circumstances, but we have evaluated the market, our competition and most importantly our clients and have developed a Bronze, Silver and Gold service approach to our CVL's. Details are below, but as always it is good to talk to our experienced advisors, and we would encourage you to call our landlin020 8290 9876 for a preliminary chat.

Facing the loss of your business and its continued income stream is traumatic - but we are here to listen, advise and assist. We hope the prices below will reflect our commitment to providing professional and honest advice at an affordable price.

Advantages of a CVL

  • Directors of the business benefit from greater control, rather than being subjected to a compulsory process, i.e., they get to tell their story first.
  • Taking a positive step lower risk of wrongful trading allegations
  • Opportunity for directors to claim redundancy pay
  • Pressure from creditors is instantly removed
  • There’s potential for directors to buy back assets

Disadvantages of a CVL

  • Directors’ conduct and financial history will still be investigated
  • CVLs are publicly advertised which can damage the directors’ reputation
  • Minimal chance of shareholder returns
  • All staff are made redundant as a result of a CVL

Creditors’ rights and duties during the CVL process

Creditors can’t instigate a CVL, but they do have certain rights during this process. Creditors are entitled to see a list of all creditors of the company and view a summary of the Statement of Affairs prior to any decision-making process.  They are involved in the process of appointing the named liquidator and are even entitled to create a committee to control liquidation costs.  Employees and HMRC have preferential status for some their debt.  In respect of the balance, creditors are paid on a Pari passu basis (“on equal footing”) i.e., each receive the same (%) of their debt.  This is of course dependent course on whether the assets are sufficiently valuable to allow for a distribution.

Frequently Asked Questions

What happens during a CVL?

When the company is liquidated, all assets are sold and the proceeds are distributed among outstanding creditors. Any company debts remaining are written off unless they have been secured with a personal guarantee (PG). Any PGs will crystalise at the point of liquidation, with the responsibility for repayment falling to the individual who provided the PG (usually the company director).

The company is then dissolved and ceases to be a legal entity. The insolvency practitioner handling the CVL process has a number of responsibilities, including liaising with creditors, identifying assets, ensuring the company is closed down properly and that the name of the business is removed from the Companies House register.

How fast is the CVL process?

CVL proceedings are fast-paced and driven by deadlines. The first step is to call a shareholders meeting – shareholders must be given 14 days’ notice of the meeting, but it can go ahead at shorter notice if 95% of shareholders agree.  This is the commencement of the Liquidation and following this meeting, the Directors have seven days to deliver their notice to creditors, requesting their vote on the resolutions passed.  The decision date for these resolutions must be no earlier than three days after the delivery of the notice, but no later than 14 days after the shareholders’ meeting.

Why is a shareholders’ meeting required?

There are several reasons why a shareholders’ meeting is necessary during a CVL. While the process is instigated by the directors, it is the shareholders who own the company, and it is they that have to decide (via a special resolution) to voluntarily commence the “funeral”.  It is also necessary to appoint a named liquidator too.

Who can make the decision to put a company into liquidation?

Insolvent companies can either be liquidated via a Compulsory Court Order or a voluntary process – a CVL is the latter. Compulsory liquidation is typically the result of creditors submitting a winding up petition against the company in question as a result of unpaid debts although it should be noted that a Winding Up Petition is a class action and not a debt collection process.  

A CVL is a voluntary way of avoiding this issue as it’s initiated by the directors, when they conclude that the financial state of the company is beyond the point of repair. While not an ideal situation, it’s often the best solution for a company struggling financially, providing the best outcome for the business, staff and creditors.

Why would a director choose to put their company into a CVL?

Directors of insolvent companies have legal responsibilities to adhere to. When it becomes apparent that the business is in an insolvent state, they must endeavour to protect outstanding creditors which means prioritising their interests above their own as Director or Shareholder.  

This means they should not engage in any activity that could worsen the position and it often means that the company needs to cease trading immediately. It’s a complex area which is why having the advice and guidance from a licensed insolvency practitioner is essential.

What’s the difference between liquidation and administration?

Often used interchangeably, there are actually two separate processes. Liquidation through a CVL brings about the end of an insolvent company (i.e. a funeral), while administration provides the chance for the business to be rescued through restructuring and refinancing. (a visit to the Accident and Emergency Department).

A company may be placed into administration if there’s a chance that the business, or parts of it, can be rescued or if there will be better returns for creditors. A CVL, however, is used when there is no chance of the business being saved.

What happens after a CVL?

Once the CVL has completed, the name and number of the company will be removed from the Companies House register which concludes the process and marks the end of the company. Just because you have been a director of a liquidated company doesn’t mean you can’t run a limited company again.

Unless there are specific terms that disqualify you from acting as a director, you can start trading with a new business, whether in the same industry or not. However, you are restricted from using the same, or a similar, trading name to the liquidated company. Speak to your insolvency practitioner if you have intentions to start another limited company.

Find out more

Please call for an informal chat on 0345 260 0101 and ask to speak with either Jeremy Frost or Michelle Breslin or Patrick Wadsted. We cover the whole of the UK and look forward to working with you.

We also have a range of other business services including MVL products, commercial mediation and business restructure.

Creditors Voluntary Liquidation (CVL)


CVL Bronze

Qualifying criteria:

  • No more than 2 directors
    and 2 shareholders

  • No ROT

  • No employees

  • No assets

  • No finance agreements

  • No pensions

  • No overdrawn directors loans 

  • Up to 10 creditors

Prices start from:



Plus disbursements and VAT

CVL Silver

Qualifying criteria:

  • Assets over £5,000

  • Yes to finance agreements
    and warranties

  • Yes to pensions 

  • Yes to employees

  • Yes to creditors 

Prices start from:



Plus disbursements and VAT

CVL Gold

Qualifying criteria:

  • Fixed Assets including
    property and lease

  • Large creditor claims

  • Complex creditor claims

  • Pending litigation

  • Shareholder and
    director disputes

  • Bespoke advice

Prices start from:



Plus disbursements and VAT

Contact an expert for professional help and advice

Our team member below will be able to help with all your questions

Jeremy Frost

CEDR Accredited Mediator & Licensed Insolvency Practitioner

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