What is a Creditors Voluntary Liquidation?
A Creditors Voluntary Liquidation allows a business that is no longer viable to close down in an orderly way.
It is entered into voluntarily by the company's Directors, with the agreement of its Shareholders and the people it owes money to (the Creditors).
Once everyone has agreed to liquidate the company, the company's affairs are put into the hands of an Insolvency Practitioner, who acts as Liquidator.
The Liquidator oversees the sale of any assets the company owns and uses the proceeds to pay creditors.
They will also investigate the actions of the company's Directors to see if there has been any wrongdoing or inappropriate decisions made.
Once Liquidation is complete the Company is formally recorded as dissolved at Companies House.
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The Creditors' Voluntary Liquidation Process:
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Steps in a Creditors' Voluntary Liquidation:
Shut down the Business
Notify Shareholders
Report on the Company's Affairs
Agree to Liquidate
Appoint Liquidator
From this point the Company is under the control of the Liquidator, who acts on behalf of the Creditors. As a Director you must co-operate with the Liquidator to carry out these Activities:
Sell Asset
Pay Creditors
Investigate Directors
Find Asset
Report on Directors' Actions
Close Company
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