CVL is the voluntary winding up of an insolvent company. For a company to commence a CVL, the company directors must recommend to the company shareholders a, liquidation as the company being insolvent. I.e.:
Cash flow insolvent – The company no longer be able to pay debts when they fall due.
Balance sheet insolvent – The liabilities of the company exceed the value of the company’s assets.
WHEN IS A CVL APPROPRIATE?
A CVL is appropriate when a company is insolvent. The company can either no longer pay its debts as and when they fall due, or when its liabilities exceed the value of its assets.
WHY CANT I STRIKE THE COMPANY OFF?
A company is struck off from Companies House register when an application to Companies House for the companies removed from the record. Possible only if it:
• the company has not traded in the last three months.
• not changed the company name in the previous three months.
• not threatened with liquidation.
• no agreements in place with creditors, e.g. a Company Voluntary Arrangement (CVA).
DO I NEED TO ATTEND TO ANY MEETINGS?
The directors hold a board meeting to consider recommending liquidation to the company’s shareholders. Following this, an extraordinary general meeting of the shareholders for the members to pass resolutions to place the company into liquidation and appoint a liquidator.
As of 6 April 2017, it is no longer an automatic requirement of the Insolvency Act 1986 (as amended) to hold a physical meeting of creditors. Depending upon the circumstances of the liquidation, the members’ appointed liquidator may be ratified as the creditors’ liquidator by deemed consent or by holding a virtual meeting.
A physical meeting of creditors held if it is specifically requested by either creditor representing ten per cent of the total creditor debt, ten per cent of the total number of creditors or by ten creditors in number.
WILL CVL BE ADVERTISED?
Notices of the liquidation remain advertised in the London Gazette. Being the only place that the liquidation requires advertising unless the liquidator feels it is necessary to place additional advertisements.
WHAT ARE THE LIQUIDATOR’S DUTIES?
A liquidator has several duties in the ordinary course of a liquidation.
• maximisation of realisations.
• Reporting to creditors on the progress of the liquidation. Seeking creditor approval for actions within the liquidation.
• collation and agreement of creditor claims
• distribution to creditors of funds realised
• investigation and reporting upon, the conduct of the directors before the company’s liquidation.