Creditors Voluntary Liquidations Will Be Popular in 2011

Thousands of struggling company owners will voluntarily close their businesses this year, and most of those that do will use a Creditors Voluntary Liquidation (CVL) process.

A CVL is perhaps more popular than a Compulsory Liquidation as it allows directors to put a company into liquidation with their shareholders’ approval and permission from creditors.

If it’s inevitable your business is about to go bust as a result of declining trade, you may as well be in control as best as you can.

Once shareholders agree to a CVL, the directors find an appropriately skilled Insolvency Practitioner (a liquidator) to create a statement of affairs, and guide them through the liquidation process.

Directors try to appoint a liquidator who will be friendly towards them because if the liquidator believes there has been any malpractice, he must examine the course of company failure and prepare a Directors Disqualifications Act (DDA) report.

The report is passed on to the Insolvency Service who may take action and order misfeasance proceedings or a disqualification.

The liquidator invites the company’s creditors to a conference and requests they vote to shut down the firm since it can’t pay its debts. The statement of affairs is used to show creditors the company is financially troubled.

By law, the liquidator must act in the interest of creditors not directors. If creditors are unhappy, the liquidator may be left with a bad reputation. Ultimately, it is the creditors who have the final say on who the liquidator is. If the creditors are unhappy they should say and appoint their own liquidator. Friendly creditors usually give a CVL their blessing. A director is also entitled to vote for a CVL if the company owes them money.

The IP collects in any debts, sells any assets and after discharging his costs, pays any remaining money as a dividend to the creditors.

But the truth is; there’s rarely any dividend because the resources realised merely cover the expenses of the procedure.

It is not hard to shut down an insolvent company if you get the proper guidance.

Contact Insolvency and Law for useful advice if you feel your organisation might be insolvent.

the 79th group

The 79th Group Update-What You Need To Know

05/05/2025

Administrations, Court Cases, and What Loan Note Holders Must Know Now The financial collapse of companies within The 79th Group is rapidly entering a critical…

Read More

T&T Trustees Appoint Administrators to 79th Luxury Living Six

25/04/2025

Are Investor Interests Being Protected? A New Twist in The 79th Group Saga Loan note holders in 79th Luxury Living Six Ltd (LL6) were recently…

Read More
the 79th group

A Difficult Truth: The 79th Group’s Latest Statement

17/04/2025

On 10 April, The 79th Group issued a public statement in response to the ongoing investigation by the City of London Police, which can be…

Read More
the 79th group

The Cold Truth About The 79th Group, the Police, and Your Money

11/04/2025

The 79th Group Loan Notes Recovery Over the past several months, a growing number of investors have come forward, alarmed and confused by what’s happening…

Read More