What is Creditors Voluntary Liquidation?
A Creditors Voluntary Liquidation is a voluntary liquidation process that is started by the directors of an insolvent company. As part of the voluntary liquidation process, in order to go into liquidation, the directors will pass a winding up resolution to commence the company liquidation process.
Circumstances leading to a Creditors Voluntary Liquidation
A company may only go into liquidation using the Creditors Voluntary Liquidation process if:-
- the company articles say that the company may pass an ordinary resolution to wind up, or
- it has passed a special resolution that it be wound up voluntarily.
The effect of a company voluntary liquidation
A Creditors Voluntary Liquidation leading to the liquidation of a company is a final process for that company or companies in liquidation. It will ultimately lead to the dissolution of the company, and its removal from the Register of Companies at Companies House.
When a company liquidation commences, a liquidator is appointed. As part of the liquidation process he or she will liquidate assets of the company in liquidation with a view to raising funds to pay creditors owed money in the company liquidation. Funds raised in liquidation sales will be distributed to creditors by the liquidator, and if there are any assets left over, then the members will receive the remainder.
Following commencement of Creditors Voluntary Liquidation
From the date of the Creditors Voluntary Liquidation, the company will stop its business activities unless the liquidator decides continuing to trade might be needed temporarily to assist with the liquidation process. For example if going concern liquidation sales are envisaged as a better way of liquidating assets.
Can I be a director of a company after liquidation?
The directors remain in office during the voluntary liquidation process to assist the liquidator, often helping with liquidation sales to liquidate assets. However, the director’s powers cease unless the liquidator says otherwise.
The liquidator in a Creditors Voluntary Liquidation is bound by law to report on the conduct of the directors of any company in Creditors Voluntary Liquidation, and if any wrongdoing is found, a liquidator may recommend that a director be disqualified as a company director, in which case the director cannot continue for the period of disqualification.
Contact the company liquidation experts today
There are many ramifications of a Creditors Voluntary Liquidation and it is important that a company considering a Creditors Voluntary Liquidation should take advice as soon as possible from a liquidation expert on whether to liquidate my company. At Francis Wilks & Jones we have a team of company liquidation experts with a vast range of experience who can advise on all aspects of Creditors Voluntary Liquidation, and whether it is a suitable option for you.