A creditors voluntary liquidation is quick to organise and is generally seen as the action of a responsible director when it is apparent that the company has no hope of avoiding formal insolvency proceedings.
A creditors voluntary liquidation “CVL” is quick to organise and generally seen as the action of a responsible director/board when it is apparent that the company has no hope of avoiding formal insolvency proceedings. The process involves a board meeting, followed by a meeting of shareholders and consultation with any holder(s) of a floating charge. The legislation allows creditor to validate the liquidator’s appointment without the need to attend a meeting. Careful planning is required because if short term trading is required e.g. to enhance asset recoveries, both suppliers and the bank need to be made aware of the process as quickly as possible in order to obtain ongoing support.
The director(s) will continue to assist the liquidator as instructed but is/are free to pursue his/their future business career
A court liquidation commences for the same reason(s) as a CVL but requires a petition to be presented to the relevant court once the board has resolved to liquidate the company. Once appointed by court, the process is broadly similar to that of a CVL. A creditor cannot instigate a CVL but must use the court route
A director can be involved with other companies at the same time as a liquidation is ongoing but clearly, the closer the connection between the various companies, the more likely that other companies that are not insolvent will be influenced by the liquidation
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