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Creditors’ Voluntary Liquidations

Creditors’ Voluntary Liquidation (CVL) is the most common form of liquidation in the UK. A company that decides to implement a CVL typically has little or no cash flow, which makes it challenging to pay debts as they fall due and ultimately can make it impossible to continue trading. Generally, it is also unlikely to have a business which requires rescuing (where administration would be the more likely procedure).

A CVL is a formal insolvency procedure which is used to close a company which cannot pay its debts and is insolvent.

This process is a voluntary option for directors and shareholders. It brings an end to directors concerns about the company debts. It should not be confused with compulsory liquidation, where one or more of the company’s creditors decide to take action against the company by issuing a winding-up petition against the company, which effectively forces the company into liquidation if not addressed. The directors initially decide to place the company into a CVL. It is the shareholders, however, that are required to pass the relevant resolutions.

When the directors decide that a CVL is the most appropriate way to address the difficulties the company is facing, the company will typically cease trading immediately. By ceasing to trade and consulting insolvency practitioners, the directors are deemed to be acting in the best interests of creditors.

For the majority of Directors, a CVL will have no effect on your ability to set up a new company.


One80’s insolvency practitioners routinely assist directors with the orderly closure of their insolvent business.