Creditor’s Guide to Creditors’ Voluntary Liquidation (CVL)

In many cases, the Liquidation process could be more favourable to creditors. But for this to happen they must become more proactive and aware of their powers. For example, few creditors understand that if they're unhappy, they can replace the Liquidator with a creditor-appointed insolvency practitioner. In a Creditors' Voluntary Liquidation, replacing the insolvency practitioner is usually the best course of action because the Liquidator should be working in the interest of creditors, rather than on behalf of the director who gave them the job.

Creditors are far more likely to enhance their prospects for dividends when they appoint their own insolvency practitioner. However, if they fail to use the power of their votes at creditors' meetings, the director's choice of Liquidator is invariably appointed. Moreover, creditors may need a Liquidator who'll investigate the director thoroughly and robustly, but this can be challenging if they're associated in anyway.

Similarly, it's always best to scrutinise and question the Liquidator's costs because the more they charge the less likely it is creditors will receive any monies back. In far too many instances, unsecured creditors receive little or no money because the funds in the Liquidation Estate have been eaten up by the Liquidator's fees.

Most creditors are completely blind to the shenanigans of self-serving insolvency practitioners, and those who are aware have become apathetic after going through previous Liquidations and never receiving anything back. Nevertheless, in essence, creditors are partly responsible for the Liquidator’s pay, and this is where much of their power lies.