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Creditors Voluntary Liquidation

Creditors Voluntary Liquidation or CVL is when the shareholders or directors of a
company make the decision to close it by placing it into liquidation because
they’re unable to pay their debts.

A Creditors Voluntary Liquidation is a terminal process and isn’t to
be entered into lightly. It’s a formal, legal insolvency process so has to be carried out by a licensed Insolvency Practitioner.

A company can be placed into liquidation in as little as two weeks and we will take over dealing with your creditors from the very start of the process.

A Guide To The Voluntary Liquidation Process

Voluntary Liquidation (or Creditors Voluntary Liquidation to give it its full legal name), is where the directors and shareholders of a company make the decision to place it into liquidation.

As it’s a formal insolvency process, it must be carried out by a licensed Insolvency Practitioner. Insolvency law puts in place certain time restrictions, as well as legal obligations for both the company, and the acting Insolvency Practitioner.

We’ve illustrated the basic processes involved below. However, the first step is always to speak to a licensed insolvency practitioner to review your position.

The voluntary liquidation process


Initial company liquidation advice meeting (completely free)
Timeline: Same day
Set up for either the same day for an ‘online meeting’, or a face to face meeting at a time and place to suit you. We’ll need at least one of the company’s directors there to explain the financial situation, after which we’ll give you an initial outline of various options available. We’ll leave you with a list of further information to get together.


Review information & advice (completely free)
Timeline: usually 1-14 days
We review all the information and advise you on all the available options (not just liquidation). We’ll provide you with a fee quote and our terms of business for review. We talk about how to deal with any company assets (and whether you wish to purchase them), along with any other matters specific to your company, such as leases, personal guarantees or contracts.


Instruction and convening the creditors meeting
Timeline: usually 1-3 days
If you would like to go ahead, and you have agreed to our terms, you formally instruct us to liquidate (or whatever option fits) on your behalf. We’ll call a meeting of shareholders and creditors, to take place usually 9 to 21 days after formal instruction.


Shareholders and Creditors meeting
Timeline: usually 9-18 days
The shareholders meeting takes place before the creditors meeting, and both meetings are held remotely. Read more about the meetings here. You will nominate one of your directors to attend by video link. Any creditors who have questions are asked to put them forward on the conference call. The meetings usually last between 30-90 minutes. The company is legally placed into liquidation.


Post liquidation assistance & closure
Timeline: usually 9-12 month
We work with you to ensure that the company’s books and records are moved to the liquidator’s office and that all assets are properly realised. Each director is required to complete a questionnaire and once we are happy that there are no outstanding matters, the liquidation is closed. Three months thereafter, the company is dissolved (removed from companies house).

What Happens at a Creditors Meeting?

Liquidation creditors meetings can be a stressful prospect for company directors. Here we’ll guide you through the process to help you know what to expect and what will be required of you.

Prior to entering liquidation

Once we have agreed with the board of directors that a voluntary liquidation is the most appropriate route, we will agree a suitable date and time for the liquidation creditors meetings.  This is generally between 9 and 21 days time.

We will send notice to:

  • The company’s creditors and shareholders
  • The London Gazette (for companies in England and Wales)

Once the notices are submitted:

  • The company’s bank accounts will be frozen
  • Parties with contracts may issue default notices

Some suppliers may attempt to have a last ditch attempt to elicit payment from you or try to recover goods previously supplied: all attempts should be resisted and the suppliers should simply be referred to our office.
At this stage the company should have completely ceased trading.

As a director you should ensure:

  • Any staff contracts are terminated.  (See our guide to redundancy in liquidation for assistance)
  • No further funds are paid from the company account
  • The books and records of the company are prepared and ready to be delivered to us

The assets of the company are protected to be delivered for liquidation.

In readiness for the liquidation meetings, our staff will work with you to prepare:

  • The statement of affairs (a statement of the company’s financial position), and
  • The directors’ report (a narrative of the company’s history and reasons for liquidation)

These documents will be put to the creditors at the creditors’ meeting.

The liquidation meetings

Our creditor meetings are held on a remote basis meaning you can attend the meeting by telephone or via an online meeting.
Normally between 9 and 21 days notice is given for the meetings, and both the shareholders and the creditors meetings are usually held on the same day; the creditors’ meeting is usually held straight after the shareholders meeting finishes.

Our liquidation timeline will give you an idea of how this might work for you.

Meeting of shareholders

This is the first of the two liquidation meetings.  Contrary to popular belief it is the shareholders of the company and not its creditors that decide whether a company is placed into liquidation.

The following will happen at the shareholders meeting:

  • The statement of affairs and the director’s report will be laid before the shareholders
  • A resolution will be passed for the company to be placed into liquidation
  • The shareholders will nominate a liquidator to be appointed over the company

In practical terms, one or more shareholders attend by telephone, and those who want to vote but cannot attend will vote by proxy. The company is placed into liquidation at the shareholders meeting, and the creditors’ meeting follows straight on afterwards.

Meeting of creditors

Creditors’ meetings now take place in any of the following formats:

  • Telephone call or meeting between the director and the liquidator (where no creditors are in attendance)
  • Conference call where only a small number of creditors are in attendance.
  • A larger meeting using conferencing software where a large number of creditors are in attendance

The creditors’ meeting usually lasts approximately 40 minutes, but if there are complicated issues that arise in discussions with the creditors, this can increase to a couple of hours.

Although we have yet to see this happen, creditors with a large enough vote do have the right to request a physical meeting which can take place at:

  • The company’s registered or trading office
  • A convenient conferencing facility, particularly for larger meetings
  • The liquidator’s office

You, or another director of the company, will be the chair of the meeting however the appointed liquidator will generally conduct the meeting on your behalf.

The following business matters will be covered:

  • Any prior relationships between the liquidator and the company will be disclosed
  • The statement of affairs and directors report will be laid before the creditors
  • Creditors will be invited to ask the directors questions (see below)
  • They will be invited to highlight anything they would like the liquidator to investigate
  • The creditors may offer alternative nominations for the liquidator
  • They may decide to form a liquidation committee
  • If no committee is formed, resolutions may be passed to agree the liquidator’s remuneration

Questions from creditors

The questions must be topical and must be linked to the company which is being placed into liquidation. You should attempt to answer any questions in a professional manner and try to answer the points raised by the creditors. The liquidator will intervene if the line of questioning becomes inappropriate, as creditors are also expected to conduct themselves in a professional manner. (Any threats of violence or bad language are grounds for being ejected from the meeting.)

Creditors may choose to have a solicitor or insolvency practitioner attend the meeting to raise questions on their behalf. Likewise, a director may choose to have their solicitor present to advise them in relation to their answers. In practical terms, we try to guide the meetings so that there is a fair balance reached between directors and creditors concerns.


A liquidator is required to investigate the actions of the directors of the company prior to liquidation.  As a part of this investigation, the liquidator will ask the creditors if there are any matters they would like to raise for investigation.

Many creditor’s concerns will have a straightforward explanation, however, if there is an action you are concerned about you should discuss it with us as soon as possible.

Nominations for Liquidator at the creditors meeting

Creditors may choose to nominate another person to act as liquidator at the meeting instead of the shareholders’ choice.  Although this is quite rare, creditors may choose to do this for a number of reasons:

  • They may have a contractual agreement to do so in exchange for representation at the meeting
  • If they believe their choice of liquidator has a particular area of expertise to increase realisations
  • They believe a creditor chosen liquidator may be more objective

The liquidator is chosen by whoever gets more than 50% of the vote of the creditors at the meeting.

Liquidation Committee

It’s possible that if three or more creditors are represented at the meeting, they may choose to form a liquidation committee.

The purpose of a liquidation committee is to:

  • Represent the interests of creditors as the whole
  • Approve the liquidator’s fees
  • Act as a sounding board for the liquidator on matters of contention

The meeting will end at this point if a committee is formed.

Liquidator’s Fees

If no committee is formed, we will often seek to establish the basis of the post-liquidation fees at this stage. Please note that the directors are not liable for these, rather they are payable out of any assets that are realised within the liquidation. If no further assets are realised, no further fees are drawn regardless of the resolution passed.

Closure of the creditor’s meetings

Once all of the above resolutions have been dealt with, the meeting will be brought to a close. We need to make sure the chair has signed all of the documents for the meeting at this stage. If the meeting was held remotely, the director will need to immediately provide the documents signed to our office.

Although meetings are of course particular to each case, this guide should give you a clearer idea of what to expect. However, if you have any questions, contact one of our expert advisors directly.

Voluntary Liquidation Vs Compulsory Liquidation

If you are one of the thousands of UK businesses issued with a winding up petition, it may well be that you are unable to see how your business can survive, and are perhaps considering letting your company be wound up.

Or you may have received a winding-up petition and you want to know your options?

Allowing your company to be wound up without first seeking advice on your options is likely to prove very costly at some point.

We guide you through voluntary liquidation vs compulsory liquidation below, to help you consider and plan your next steps.

Court Process

The first and main benefit of voluntary liquidation is that it gives you time to talk with your insolvency practice of choice. You can take advice and firm up answers to some of the issues that may be on your mind.

We’ve listed below a few of the most common concerns or problems that directors face at this time, which are often much better dealt with in a well organised voluntary liquidation:

  • Personal Guarantees: when the company goes into liquidation, any personal guarantees you have given will ‘crystallise’ or become payable; ideally you need a preemptive plan in place to deal with this.
  • Director’s redundancy claims: if you have been on the company’s payroll, you may be entitled to make a claim for directors’ redundancy.  This could be crucial income at a time that you most need it.
  • Director’s loan accounts: the liquidator will look to recover any funds owing from an overdrawn director’s loan account.
  • Director’s conduct advice: the liquidators’ investigation into your conduct as company director is a mandatory aspect of liquidation.
  • Redundancy process or transfer of existing staff to a new business.
  • Sale of assets.
  • Transfer of leases.

As voluntary liquidation is a paid service that we provide, you won’t be too surprised when we say it is normally a better option! However, in terms of making you better prepared and able to cope with what liquidation will throw at you, voluntary liquidation is a much more controlled solution.

It also gives you chance to find out any other information or options that you might not be aware of.  This means that you can plan for what liquidation will entail, rather than having the choices of the Official Receiver forced upon you.

Next Steps

When a company is wound up by HMRC or anyone else, once the Official Receiver is officially appointed, the liquidation process begins.  However, even if a petition has been issued, you can still apply for voluntary liquidation at any time prior to the court hearing date.

If you are worried about the costs of voluntary liquidation, try our liquidation fee calculator to get a quote for what voluntary liquidation might cost you.

Alternatively, if you would like to talk this through with one of our business rescue experts, use our booking system to arrange a meeting or contact one of our business rescue experts directly.

Reusing a company name after liquidation

The prohibition on reuse of a liquidated company’s name was put in place to address the problem of ‘phoenixing’. The idea was to prevent a company running up debts, entering liquidation and then a new company being set up to continue trading whilst it appears to the outside world that nothing has changed.

To counteract phoenixing, for the five years following liquidation, any such director or shadow director may not be a director of, or take part in the “formation, promotion or management” of a company or business with a ‘prohibited name’, either directly or indirectly.

What is a ‘prohibited name’?

A ‘prohibited name’ is one that a company in insolvent liquidation has been known by in the previous 12 months before the date of liquidation. It also includes any name similar enough to appear that there is a link with the company in liquidation. This applies to both registered names and trading names.

Consequences of Using a ‘Prohibited Name’ after liquidation

Using a ‘prohibited name’ is a criminal offence so the consequences can be severe. A person who doesn’t follow these exceptions is liable to imprisonment, a fine, or both. They may also be held personally liable for the debts of the new company which uses the ‘prohibited name’.

Someone who agrees to be a director of a company using a ‘prohibited name’, or is managing such a business and acting on the instructions of someone they are aware is contravening the laws against phoenixing can be liable too, not just the director of the insolvent company.

What are the exceptions?

There are 3 exceptions under the Insolvency (England and Wales) Rules 2016 which allow the ‘prohibited name’ to be reused:

  • Purchase of business: if a new company purchases the whole, or substantially the whole of the business in liquidation then a similar name may be used. In addition, notice of the purchase must be sent to all known creditors of the insolvent company, and it must be advertised in the London Gazette within 28 days of the sale being completed.
  • Court permission: the new company can make an application to court within 7 days of the liquidation. The name can be used until the earlier of 6 weeks following the liquidation, or until the court has heard the application.
  • Existing use: if a company has been trading and using what would otherwise be a ‘prohibited name’ continuously for a minimum of 12 months leading up to the liquidation then the rules allow this name to continue being used.

Frequently Asked Questions about Creditors Voluntary Liquidations
Can I liquidate my company myself?

No. A liquidation is a formal insolvency event and has to be overseen and conducted by a qualified insolvency practitioner to ensure all stages of the process are fulfilled.

How long does it take to liquidate my business?

The process varies depending on the size and complexity of the business. It could be completed in as little as nine months or less, or could extend to over a year; to some extent this will depend on the attitude and actions of the company’s shareholders and its creditors.

How much will it cost to liquidate a company?

The cost of liquidating a company can vary depending on several elements. How many creditors are owed money? How many assets does a business have and what is their value? Will the business name or a similar one be reused? Have any of the debts been personally guaranteed? Will there be any redundancies? Would you like to buy back any of the assets from the liquidator? Only when these are answered can we get a clearer view.

Do creditors get a say in whether I can close my business?

Creditors and shareholders may each attend a meeting. The shareholders’ meeting happens first where they will be appraised of the situation and invited to vote on the motion to liquidate the company. The creditors’ meeting happens afterwards where they will be appraised of the likely timescale of the liquidation and disposal of assets.

What happens to the business’s assets?

The assets will be sold and the funds used to pay back creditors.

How much does liquidation cost?

Placing a company into liquidation costs between £2,500 and £7,000, depending on how many businesses you owe money to and what assets you need to liquidate.

Can I purchase the company’s assets?

Yes. The company’s assets will be valued by independent agents (appointed by us) who will oversee their sale. They will ensure that the right price is agreed for the assets, taking account of age, condition and saleability.
Sometimes it might be possible to pay for assets on deferred terms. Although this provides a lower up
front payment, it can be more expensive overall and normally requires security such as a personal guarantee.

Can I reuse the company’s name?

Yes. However, you need to purchase the company’s ‘goodwill’ in order to do so, and there are some strict legal requirements to follow. Read more about reusing a company name.

Can I stay in the company’s existing premises?

Unless there is strong demand from tenants for your type of property, we find that most landlords are amenable. As long as you’re able to agree a new lease with the landlord, then you should be able to stay in the premises.

What happens with the company’s bank account?

When the notices for the creditors meeting are advertised in the London Gazette, the company’s bank account will be frozen. If there is a credit balance, this will be held as an asset for the liquidator to deal with. Any amount overdrawn will be a claim within the liquidation.
If there is an overdrawn bank balance and you have given a personal guarantee, the bank will look to recover the balance from you personally.

Can I repay certain suppliers before liquidation?

Don’t use company funds to pay anyone just prior to liquidation unless you have the proposed liquidator’s approval. The liquidator will only approve if it is for the overall benefit of the creditors. If you do pay a debt from company funds in the build up to liquidation, you may be held personally liable for that amount (this is called preference).

What happens to my staff in a liquidation?

Liquidation ultimately means the end of the business, so any staff remaining will be made redundant. If there are unpaid earnings, or outstanding employment entitlements owing to staff, they will be able to make a claim for any unpaid earnings and outstanding employment entitlements from the National Insurance Fund.
For more information, visit our information page redundancy in liquidation‘, which explains employer and employee rights.

Can a director claim redundancy pay in liquidation?

Yes. If you have historically received salary through the company’s PAYE, and you are a director-employee, i.e. not just a shareholder or an office holder, you may also be able to claim outstanding employment entitlements from the National Insurance Fund in the same way.

What happens with any Personal Guarantees in liquidation?

Liquidation will crystalise any personal guarantees, meaning that you will now potentially become liable.

However, most banks and suppliers are willing to organise sensible repayment plans, as long as you keep good communication with them. Find out more about Personal Guarantees in insolvency here.

Does liquidation affect my personal credit rating?

No. Liquidation does not appear on personal credit referencing searches.

Can I repay money owed to myself, family or friends prior to liquidation?

If you use company funds to repay yourself, or connected parties, you may be held personally liable for the payments.

What happens with any vehicles on contract hire?

The contract hire agreement will end once the company enters liquidation, and any shortfall will be a claim in the liquidations. As long as you have not given a personal guarantee, then you will not be personally liable for this.
If you wish to continue using the vehicles for your new business, then you can seek the consent of the lease company to transfer or set up new agreements.

How can I reuse a company name after liquidation?

When a company enters insolvent liquidation, insolvency legislation prevents the
same name or similar being used again by the company’s directors. This is known as ‘phoenixing’, and the penalties for doing it can be severe. However, there are
certain exceptions to the rule.

I am buying the business from a liquidator – what steps should I take to reuse the name?

Purchasing the business of the insolvent company is perhaps the most common way that a director is able to reuse the name. These are the steps you would need to take before reusing the name:

  1. Purchase the whole, or substantially the whole of the business from the liquidator.
  2. Send notice to all known creditors of the insolvent company (on Rule 22.4 Notice) within 28 days of the sale being completed. Rule 22.4 Notice can be found here.
  3. Advertise in the London Gazette, also within 28 days of the sale being completed using Rule 22.4 Notice. See more information here. The cost for placing this advert is currently £87.50 plus VAT.
  4. Ensure that notice is given before the new company begins using the ‘prohibited name’.
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