A Creditors’ Voluntary Liquidation (CVL) is a process used to formally close an insolvent limited company, effectively writing off all unsecured debts. If you’re considering this option, it’s crucial to seek professional advice tailored to your company’s specific situation. At Director First, we can assess whether a CVL is the most suitable solution for your business. Should liquidation be the best option, we will guide you through the initiation process.

What happens during a voluntary liquidation?

• Clearance of Liabilities: All unsecured liabilities are cleared, including debts to HMRC, Bounce Back Loans, and trade suppliers. If there are liabilities secured by a personal guarantee, these require immediate discussion with us.
• Management of Creditors’ Demands: All demands from creditors are handled by an insolvency practitioner, ensuring that all legal and financial requests are properly managed.
• Legal Actions: Any ongoing legal actions against your company are halted, providing relief from any legal pressures during the process.
• Closure of Company: The company is efficiently and completely closed down, allowing you to conclude all business operations formally.
• Future Planning: Once the liquidation process is completed, you can begin to focus on planning for the future, free from the burdens of the previous company.

While these outcomes may seem beneficial, understanding if a CVL is feasible and advisable for your business is essential. A clear grasp of your current financial status is vital to avoid unexpected challenges later.

A Creditors’ Voluntary Liquidation (CVL) results in the formal closure of the business, leading to all staff members being made redundant. Affected staff members are entitled to claim redundancy payments and any owed earnings from the National Insurance Fund. We provide guidance on how they can apply for these entitlements, ensuring they understand the necessary steps to secure their claims.

Directors and shareholders are not personally liable for the debts of their company, thanks to the limited liability structure of Ltd companies. This protection is a primary advantage of incorporation, safeguarding the personal financial profiles of directors and shareholders if the company fails. Therefore, if a company enters into liquidation, this action does not appear on the personal credit reports of the directors or shareholders.

Before liquidating, it’s essential to confirm that all corporate affairs are in order, such as finalising outstanding financial obligations and ensuring accurate records. As directors and shareholders are not personally liable for the company’s debts in a Ltd company, this protects your personal financial profiles in the event of a company’s failure. It’s important to remember that liquidation itself does not affect your personal credit reports, reflecting the separation between personal and company liabilities.

In liquidation, your Bounce Back Loan is treated as an unsecured debt. Provided it was applied for correctly and used according to the terms and conditions, it will be written off during the liquidation process. This means you are not personally liable for repaying this loan once the company is liquidated.

While some companies may offer liquidation services at seemingly low prices, it’s essential to consider the value you’re receiving in return. Our services may be priced higher due to factors such as comprehensive assessment, transparency, expertise, personalised service, and long-term value. We believe in providing thorough and transparent support throughout the liquidation process to safeguard your financial interests and minimize the risk of future complications. Ultimately, the investment in a comprehensive liquidation process can yield significant long-term benefits.

The process to place your company into liquidation can be completed in as little as two weeks. Initially, we will thoroughly review your company’s situation and discuss all available options with you to ensure you understand the best course of action. If liquidation is determined to be the most suitable option, we will send you a detailed proposal and begin the formal process. After appointing a liquidator, they will manage all dealings with your company’s creditors.