Advantages and Disadvantages of Creditors’ Voluntary Liquidations (CVL)

Has your company reached the end of the road? Creditors’ voluntary liquidation enables you to settle the business’s debts and conclude its affairs in a smooth, orderly manner. Indeed, placing your firm in a CVL managed by your preferred insolvency practitioner, who performs the vital role of liquidator, is a far less painful process than compulsory liquidation.

There’s no escaping the fact that liquidation, whether voluntary or not, spells the end for a company. As our complete guide to CVLs makes clear, the liquidator sells company assets to repay debts and dissolves the business. However, with regards to pros and cons, CVL is typically a more positive than negative experience for directors, shareholders and creditors.

We’ll discuss that important point, alongside other key points, in this guide to creditors’ voluntary liquidation advantages and disadvantages. For tailored advice about creditors’ voluntary liquidations, call Irwin Insolvency’s licensed insolvency practitioners today on 0800 254 5122.

CVL Advantages

When you consider its pros and cons, CVL offers compelling benefits that often outweigh unfavourable aspects. Let’s begin our examination of creditors’ voluntary liquidation advantages and disadvantages with the plus points.

More Control, More Choice

Pursuing creditors’ voluntary liquidation means you’ve taken the decision to shut down your company instead of waiting for the court to send in the official receiver. In comparison to compulsory liquidation, a CVL therefore gives you more control over when the liquidation starts, how you break the news to employees and which insolvency practitioner becomes the liquidator.

Seen to Be Acting Responsibly

When thinking about creditors’ voluntary liquidation advantages and disadvantages, it’s important to consider the impression your actions as a director will make on your peers. Arranging a CVL has the major advantage of being a proactive approach to insolvency. It shows you take your legal duty to protect creditors’ interests seriously. As a result, it can safeguard your reputation.

Faster, Smoother Process

Our skilled insolvency practitioners ensure directors, shareholders and creditors are all consulted before CVLs are implemented. So in terms of pros and cons, CVL has the distinct benefit of fostering a spirit of cooperation between key parties. This oils the wheels, helping liquidations to proceed more efficiently.

Relieves Creditor Pressure and Writes Off Debt

As liquidator, your insolvency practitioner arranges and completes the liquidation for you, including dealing with creditors. No more emergency meetings or sleepless nights.

CVLs cover all debts, from supplier invoices to HMRC tax, and funds used for repayments primarily come from the sale of assets. You’re unlikely to be liable for the debts yourself unless you personally guaranteed any sums the business borrowed.

And no discussion of creditors’ voluntary liquidation advantages and disadvantages could be complete without us pointing out that any remaining debt is written off when the CVL ends.

CVL Disadvantages

For a balanced view of creditors’ voluntary liquidation, you also need to be aware of the drawbacks.

You’re No Longer in Charge

You worked hard to build up your business, so it can be a real wrench to hand over the reins to the liquidator. But bear in mind that your firm is in safe hands with us – we’ve been looking after insolvent companies for over 25 years.

Public Knowledge

As Companies House and The Gazette need to be informed that your company is being wound up, the CVL will become public knowledge. On a positive note, people will respect you for taking steps to bring your company to a dignified end.

Staff Redundancies

When considering creditors’ voluntary liquidation advantages and disadvantages, you can’t overlook the fact that your workforce will sadly be made redundant. Fortunately, staff can claim redundancy payments from the government – and so can you if you’re also classed as an employee.

Conduct Investigated

The liquidator is obliged to establish what went wrong and whether or not the directors played a role in the company’s financial crisis. However, if you’ve acted lawfully and responsibly, there’s nothing to fear.

Long-Term Process

Liquidation may take between several months and several years, depending on the complexity of the business’s finances, so a CVL is a long-term commitment. But you can rely on our insolvency experts to be with you every step of the way.

Contact Irwin Insolvency to Arrange a CVL

Now you’re familiar with the pros and cons CVL presents, it’s time to act. If you’d like to discuss how creditors’ voluntary liquidation advantages and disadvantages may affect your company, our insolvency experts are ready to advise you. We can also set up a creditors’ voluntary liquidation in as little as two weeks.

Want to liquidate your company and move on? Contact Irwin Insolvency today.

More on CVL from Irwin Insolvency

What is a CVL

CVL timeline

How much does a CVL cost