Can You Stop Compulsory Strike-Off by Creditors’ Voluntary Liquidation?

Before the directors of an insolvent company place it in creditors’ voluntary liquidation, it’s essential they fully understand what the outcome will be. Liquidation means ‘bringing a business to an end’, explains financial resource Investopedia. Indeed, Companies House routinely removes – or strikes off – liquidated firms from its register.

With a CVL in place, there’ll be no more sleepless nights spent worrying about creditors’ demands, but you may still find it difficult to let your company go. In that case, you’ll want to know the answer to a question many directors ask: ‘can you stop compulsory strike-off due to CVL?’

As licensed insolvency practitioners, we’re appointed as liquidators by businesses entering creditors’ voluntary liquidation across the UK. We’re therefore in an ideal position to discuss whether or not CVLs always result in companies being struck off.

What Happens When a CVL Ends?

By the time a CVL draws to a close, the company will have been dismantled and its affairs wound up. Directors will have given control of the firm to the liquidator. Employees will have claimed redundancy payments from the government. Debts will have been repaid following the sale of assets.

The liquidator sends a full and final progress report, including a financial summary highlighting the total funds recovered and paid out, to the Companies House Registrar. What happens next will be of particular interest to anyone asking ‘can you stop compulsory strike-off due to CVL?’

The company will be struck off the register three months after Companies House receives the report so will no longer exist as a legal entity. Dissolution is a normal, necessary, non-negotiable part of the CVL process. After all, the debt-stricken firm couldn’t have continued because it didn’t have a realistic chance of recovering and was therefore no longer viable.

Can a Company Continue After a CVL?

In exceptional circumstances, the liquidator or someone connected to the company can apply for a court order to defer the dissolution (for example, if new information comes to light about a director’s conduct). If the court grants the deferral, the company will still be dissolved, just at a later date than planned, giving it extra time to resolve the legal matters that have arisen. The court can stop the dissolution altogether if it feels those matters are so complex and time-consuming that the firm should remain a legal entity indefinitely, but this is rare and certainly doesn’t mean a return to business as usual.

So, can you stop compulsory strike-off due to CVL so that your company can continue? No – the purpose of CVLs is to give insolvent businesses a dignified end. Only viable companies facing compulsory strike-off (due to failure to submit accounts, for example) can appeal against it.

What you could do, however, is purchase some of your old company’s assets during the CVL and start a new business (with an entirely different name). The liquidated firm will be struck off, but your career can continue.

Ask the Experts to Arrange a CVL

If your company has reached its final chapter, our creditors’ voluntary liquidation experts can help. We give insolvency advice to directors every day and answer questions such as ‘can you stop compulsory strike-off due to CVL?’

If you want to arrange a CVL, we can handle the whole process too.

For CVL advice, call Irwin Insolvency today on 0800 254 5122.

More on CVL from Irwin Insolvency

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Pros and cons of CVL

CVL timeline

How much does a CVL cost

Can you change liquidators in a CVL

What happens to directors in a CVL

Can you remove assets before a CVL