The latest monthly corporate insolvency statistics show that while there has been a month on month reduction in the number of company voluntary liquidations (CVLs) from March to April, they still overwhelmingly remain the most frequent insolvency process for businesses looking to close their doors for the final time.
Last month, 81% of all company insolvencies were CVLs which underlines what an established and reliable method it is to close a company down.
But there are several other compelling reasons why any director or business owner that’s contemplating closing their business should consider a company voluntary liquidation as the ideal vehicle to do so.
Why should a business liquidated using a CVL?
- If the business is or is close to becoming insolvent and cannot service its debts when they fall due
- If the business is barely breaking even, has no reserves or savings and has no realistic or viable way of becoming profitable in the future
- If the owners of the business or its directors are retiring with no succession plans in place or want to move onto new opportunities rather than oversee a restructuring process
- If the business has been acquired by new ownership or another business and all they want are the businesses assets, stock, staff and or/IP – not the whole business
- If the business has been subject to a legal action or investigation and the directors believe that it could never regain its good name or customer trust
Remember, a creditors voluntary liquidation has to be overseen by a licensed insolvency practitioner (known as the liquidator) as they manage the procedure but the directors can choose which one they will use if they initiate the process themselves.
Even if they are appointed by directors, the liquidator’s role is to act in the best interest of the creditors at all times and will ensure that any of the company’s assets realised will be at the highest possible value.
If there are no complications or unforeseen issues then the process is relatively straightforward, a company can be placed into liquidation in as little as 2 weeks, and can be fully completed in as little as nine months in some cases.
Any outstanding unsecured debts including bounce back loans will be written off.
Chris Horner, insolvency director with BusinessRescueExpert, said: “The Insolvency Service were given additional powers last year to investigate directors conduct after their company has been dissolved or struck off.
“This makes a CVL even more appealing for directors looking to close their business because it’s the only procedure that ensures that unsecured debts are written off and won’t follow them to their next venture.
“There are some things for directors to bear in mind before they look to appoint a liquidator.
“Getting impartial professional advice is a given but they should also make sure that the business is truly insolvent before initiating a CVL.
“They should also be honest and transparent with their creditors and the liquidators at all stages of the process and always answer questions in a timely manner as this will save everybody time in the long run.”
If you want to know more about how a creditors voluntary liquidation could free you to move onto your next professional venture then get in touch with us today.
After a free consultation with one of our team of expert advisors you’ll be in a better position to choose your next move and probably with a better range of options than you originally thought you’d have.
All you have to do is pick the best time and date for you and we’ll do the rest.