Creditors Voluntary Liquidation (CVL)

If your company’s debts have become unmanageable and pressure from creditors has reached tipping point, it can be overwhelming. In these circumstances,   a CVL may be the solution to your company’s financial difficulties.

What is a Creditor’s Voluntary Liquidation and how can it help my company? 

Creditors Voluntary Liquidation is the most common form of Liquidation in the UK.

A company that has decided to implement a CVL generally has little or no cash flow, which in turn makes it difficult for it to pay its debts as and when they fall due. A CVL is usually the last resort for a company as it is insolvent and cannot continue trading.

As the name suggests, the process is a voluntary option for Directors and Shareholders to bring an end to worries regarding company debts quickly and professionally. It should not be confused with Compulsory Liquidation, which is the process where one or more of the company’s Creditors issue a Winding up Petition to the Courts and effectively force the company into Liquidation.

When the Directors decide that CVL is the best way forward, the company will generally cease trading immediately. It is imperative that the company does not take on any more credit or incur further liabilities at this stage as this could be considered as worsening the Creditor’s position. It is for this reason that it is important that the Director seeks professional advice, as the director may become personally liable if he is later found to have worsened the Company’s position.

It may be possible for Directors/Shareholders or other parties connected to the company (i.e. employees) to acquire the assets of the company at market value and continue trading in the same line of work. If you have any interest in purchasing the assets, you should advise the proposed Liquidator and submit a formal offer. Assuming that the offer is in line with market value, and no other higher offers are received, the sale can be completed on the appointment of the Liquidator after the Creditors meeting.

There are strict controls regarding re-using company trading names, however this can be explained in further detail if required.

Advantages of a CVL

  • It gives Directors an opportunity to deal with the company’s insolvent position quickly and professionally.
  • It gives Directors a clean break, allowing them to move on.
  • By ceasing to trade the company upon the realisation of insolvency, the Directors reduce the risk of wrongful trading.
  • Enables Creditors to submit their claims in a controlled manner.
  • Liquidation does not affect the Directors’ ability to be a Director of another company (unless a subsequent disqualification order is made).
  • Employees that are made redundant as part of the company’s Liquidation will still receive any redundancy payments due to them from the Redundancy Payments Office (subject to limitations).
  • It can be possible for the Directors or Shareholders to purchase the company’s assets at market value and trade again in a similar line of business.


We offer all our customers a complimentary initial meeting to establish what options may be available to mitigate your situation.
0161 413 0999