This is the highest individual monthly total since January 2019 and the third consecutive month that over 1,000 have been recorded.
So why are so many businesses with outstanding bounce back loans and other debts choosing a CVL to reach an arrangement with their creditors and close down?
There are several reasons, protections and advantages a CVL will give a director or business owner of a closing business.
A CVL follows proper procedures and has protections
An essential and unavoidable part of the voluntary liquidation process is an investigation into the directors conduct.
The insolvency practitioner overseeing the process has to provide a report to the Insolvency Service summarising the activities of the directors in the weeks and months leading up to the insolvency.
Directors who disregarded their legal duties or acted dishonestly or fraudulently will have to answer for their actions and could face punishment including fines or being disqualified from acting as a director for up to five year.
In a CVL, this is a collaborative process with the practitioner who will ask pertinent questions but will also look for explanations and evidence to support those decisions taken for the benefit of the business at the time.
They won’t look to trip up or catch out - they will help the directors provide any necessary evidence to support their records and statements.
The forthcoming Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill will give the Insolvency Service additional and retrospective powers to investigate the conduct of directors of improperly dissolved businesses in the past few years.
If they find any evidence of malfeasance then they will be able to issue the usual range of punishments but could also make those same directors personally liable for any unpaid debts.
This does not apply to directors or owners who close their business through a CVL.
A CVL is cost effective
A creditors voluntary liquidation can range from between £2,500 and £7,000 but should be considered as an investment rather than a cost.
As the process has to be completed by a licensed insolvency practitioner, the fee is unavoidable but you are also paying for the advice, support, knowledge and guidance that comes from using an experienced and dedicated professional with years in the industry.
They will guide you through every step of the process, will always be available to answer any questions you might have and can also highlight the main areas you could want to focus on such as whether you would want to reuse the company name at a later date or the most efficient way to purchase the assets of the business.
If there is any aspect of the process that they can’t dedicate themselves to - such as reclaiming redundancy pay for directors - then they can recommend appropriate partners that could help.
A CVL is efficient
The creditors voluntary liquidation is a streamlined, tried and trusted procedure that can be completed in as little as two working weeks from the initial meeting to business closure.
All of the essential meetings can be conducted remotely including the creditors meetings to reduce travelling time and expense and while the majority of required documentation can be securely uploaded, if anything has to be physically sent, the practitioner will provide a detailed list of requirements in advance to give you time to find the appropriate evidence.
After a free, initial consultation, the practitioner will provide a review of your situation and recommend your available options. If you decide to proceed with a CVL then the practitioner will convene the necessary creditors and shareholders meetings once officially instructed by you to act.
Once these meetings are satisfactorily concluded then the business can be legally placed into liquidation and the practitioner begins realising any assets and completing any outstanding issues.
A CVL is conclusive
A creditors voluntary liquidation will also provide solutions to many outstanding problems and issues hanging over business owners or directors of a company facing hard times.
As more signs of normality and pre-pandemic behaviour return for consumers, many businesses are still finding themselves having to deal with the consequences and effects of 18 months of disrupted trading.
And while the efforts have been nothing short of heroic, some will find that the combined circumstances will be just too much to overcome and otherwise viable businesses will have to look at alternative measures to survive in the short term.
But even this might not be enough to give the business a chance of future profitability and closure will be the only real option for them - although this will free them to pursue new ventures and opportunities in 2022 and beyond.
A creditors voluntary liquidation is the most complete solution to close down a company with outstanding debts but it might not be the only way forward.
Once a business owner or director has their free initial consultation with one of experienced advisors, they will better understand the range of options available to them, often more than they initially believed they had.
But they have to act quickly - the longer they wait, the less options they will have and the less favourable the conditions to act under.