Creditors’ Voluntary Liquidation (CVL) Solicitors

Creditors’ Voluntary Liquidation is a formal insolvency procedure where shareholders resolve to wind up an insolvent company voluntarily. An insolvency practitioner is appointed to liquidate the assets and distribute proceeds to creditors.

Creditors may appoint the liquidator, submit proofs of debt, attend meetings, and potentially receive dividends. Secured creditors are paid from charged assets, and unsecured creditors may receive a dividend depending on available funds.

No. Once in CVL, the company ceases trading. However, a liquidator may temporarily trade to realise stock or maximise value. Directors lose control unless powers are expressly preserved by creditors or the creditors’ committee.

Directors’ powers cease when liquidation begins. They must submit a statement of affairs and may be investigated by the liquidator. If misconduct is found, they could face disqualification proceedings.

Directors may be eligible for statutory redundancy which can help cover IP fees. Alternatives include paying all of the company’s debts and then voluntarily dissolving the company at Companies House, agreeing a payment plan with the IP or allowing creditors to petition for compulsory liquidation - though this removes control from the directors.

Our clients were the pioneers of luxury composite screens that can be used in the home and garden. 

After our clients’ original company entered liquidation, our clients purchased the company’s trading name along with its business and other key assets from its joint liquidators.  As part of this transaction, our clients took professional advice on the use of the trading name and believed that they had properly complied with their legal obligations by giving notice to creditors that they intended to carry on using the trading name. 

Unfortunately, due to the precise and narrowly-drafted provisions of Section 216 of the Insolvency Act 1986, our clients inadvertently breached those provisions and had to make an application to the court to permit them to act as directors of a company known by a prohibited name.  With our assistance, our clients were able to obtain the court’s permission in regard to the same. 

We acted for the joint liquidators of a company which provided IT consultancy services in relation to the sale of its assets after the company had entered liquidation. 

We have acted for liquidator of a company that was involved in buying and selling real estate and which was placed into creditors’ voluntary liquidation by its director.

Prior to entering liquidation, the company had sold a commercial property and distributed the proceeds, which totalled in excess of £500,000, to various parties, which included former directors and shareholders of the company and other third parties connected to the company. 

We have acted for the liquidator in relation to the bringing of various claims, including for transactions at an undervalue, preferences and misfeasance.   

We acted for the joint liquidators of a company that was engaged in several residential construction projects. 

We advised on various claims to be brought against the former director of the company which included an overdrawn director’s loan account, a loan to a third party and illegal dividends.  We also dealt with agreeing a standstill agreement in respect of the limitation period for bringing these claims. 

We successfully settled the matter for our client prior to the preparation and issue of court proceedings. 

We acted for the directors of a failed fast food franchise restaurant operator that ran several restaurant outlets in the south of England under a well-known and established national brand.

The joint liquidators intimated a series of claims relating to debt, misfeasance, breach of trust, transactions at an undervalue and void dispositions.  The joint liquidators engaged solicitors to send correspondence in relation to those claims.  Following exchanges of correspondence over a number of months between the parties’ solicitors, the parties agreed to mediate the claims which ultimately led to a negotiated settlement prior to the issuing of court proceedings against our clients.

We acted for the joint liquidators of a professional fitness training company. 

Court proceedings were issued against the director of the company in respect of a misfeasance claim relating to the misapplication and retention of company monies totalling in excess of £300,000.  Judgment was obtained against the director which was then secured via a charging order placed on the director’s matrimonial home. 

An application to the court was then made for the possession and sale of the director’s home which was compromised by the director agreeing to pay instalments to discharge payment of the judgment. 

We acted for the liquidator in a successful application to the court to increase the amount of our client’s remuneration.  The company’s creditors had previously agreed the amount and basis of our client’s remuneration but an application to the court had to be made when a material change in the work required to deal with the liquidation of the company resulted in the liquidator’s fees increasing and this required the court’s approval when the company’s creditors failed to approve the same. 

We acted for the joint liquidators of an engineering company in a successful application to the court where the court approved the basis and amount of our client’s remuneration.  The application to the court was required when the company’s creditors failed to approve the same.