Creditor Voluntary Liquidation ('CVL')
A Creditors’ Voluntary Liquidation (CVL) is the most common method of closing an insolvent company that can no longer continue trading.
When a company enters a CVL, a licensed Insolvency Practitioner is appointed as liquidator. Their role is to take control
of the company, realise its assets and distribute the proceeds to creditors in accordance with insolvency legislation.
During the liquidation process, the company’s assets are valued and sold. In some cases, directors may be able to
purchase certain assets, provided this is done at fair market value.
Entering into a CVL can help relieve the stress and pressure placed on directors by creditors, particularly when action is taken promptly. Taking early advice may also help reduce the risk of personal liability for directors.
The liquidator’s fees are typically agreed by creditors and are paid from the funds realised from the company’s assets.
Following the realisation of assets, any available funds are distributed to creditors in accordance with statutory order of priority. The process also enables employees to claim certain entitlements, such as arrears of wages, holiday pay and redundancy payments, from the Government’s Redundancy Payments Service.