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Creditors’ Voluntary Liquidation
If your business is financially distressed and facing mounting creditor pressure, it is important that you seek immediate advice.
There are a number of solutions available depending on your business and its current situation; however, if your business has limited assets and is not considered viable in its current from going forwards, then CVL may be appropriate.
A CVL is lead by the directors and shareholders of the company, meaning that you will be able to choose the Liquidator that you wish to work with.
CVL enables the business to be wound down and closed properly, with all known creditors consulted by the Insolvency Practitioner before the company enters Liquidation, and throughout the process thereafter.
Once engaged, the proposed Liquidator will notify all creditors of a Decision Date that is convened typically 2-4 weeks from engagement. It is on this date that the company formally enters Liquidation; however, this initial notification and engagement with creditors serves to alleviate creditor pressure.
During this period, the proposed Liquidator will extract various information from you, and prepare a report and financial statement of affairs of the company, which is shared with creditors prior to the decision date.
Once appointed the Liquidator’s role is to realise the Company’s assets for the benefit of creditors.
In addition to the sale of any physical assets, the Liquidator will seek to collect in any monies due to the company. You will be afforded the opportunity to purchase any assets of the company you may wish to keep, should your intention be to start a new company. Contrary to common belief, entering Liquidation does not automatically prevent you from acting as a director in the future. Whilst there are restrictions regarding the re-use of the same or a similar company name, as long as certain acts are carried out by you, then this is still possible. Our Insolvency Practitioners will provide you with the requisite advice in this area to ensure that you do not encounter any problems.
As a director of a company that enters Liquidation, your personal credit rating will also not automatically be affected, providing that it does not result in any unpaid amounts in respect of personal guarantees.
In addition to the above, any employees that are made redundant as part of the Liquidation process will be provided with the relevant guidance and assistance in respect of claiming any monies owed to them.
Any arrears of wages, holiday pay, pay in lieu of notice can be claimed from the Redundancy Payments Service, up to statutory limits. This process is overseen by the Liquidators, to ensure that any loss suffered by employees is recovered in a timely manner.
Costs of Liquidation
The fees and expenses of the Liquidation are subject to approval, paid in priority to payments to
Ordinarily these fees are met from the proceeds of asset realisation, and in these instances, there is no direct cost to the directors.
However, should your company have insufficient or no assets to cover these costs, they will need to be met by the directors personally.
In this scenario, we will agree with you a fixed fee for dealing with the Liquidation, ensuring that there are no further, hidden costs.
Benefits of Liquidation
- You are able to nominate the Liquidator of your choosing
- Option to purchase the company’s assets at fair value, should you wish to start a new company
- Offers the ability to leave historic debts behind
- Ensures an orderly wind down and closure of the company, should you wish to walk away
- The Liquidator has the power to terminate any leases in the name of the company, should they no longer be required
- Any employees terminated as a result of the Liquidation are able to submit claims to the Redundancy payments Service for any arrears of wages, redundancy pay etc.
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