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What is a CVL?
A company can only be put into voluntary liquidation by its shareholders. The liquidator appointed must be an authorised insolvency practitioner. There are two types of voluntary liquidation, members' voluntary liquidation and creditors' voluntary liquidation.
There are two types of CVL's
Members Voluntary Liquidation:
A members' voluntary liquidation can only take place if the company is solvent. The directors must make a formal declaration of solvency
To be made by the majority of directors on a date no more than five weeks before the passing of the resolution for voluntary winding up be filed at the Companies Registry
Must state that the directors have made a full inquiry into the company's affairs and are of the opinion that the company can pay its debts and interest within a maximum of 12 months
Must Include an up-to-date statement of the company's assets and liabilities
It is a criminal offence to make a declaration of solvency without reasonable grounds
The Shareholders must pass a special resolution for winding up unless the company resolves that it cannot continue.
Creditors Voluntary Liquidation:
shareholders of the company decide to put the company into liquidation, but there aren't enough assets to pay the creditors in full. ie. the company is insolvent.
The liquidation begins from the time the resolution to wind up is passed.
If the majority of directors do not make a declaration of solvency, or the company is insolvent, the shareholders can still vote for a voluntary liquidation.
Shareholders must hold a general meeting of the company
Shareholders must pass a resolution for voluntary winding up (as for members' voluntary liquidation)
The company can nominate an authorised insolvency practitioner as liquidator. It must also call a meeting of creditors (usually on the same day as the shareholders' meeting) at which they receive details of its financial situation.
How do I apply for a CVL?
01
Your first step is to collect details about the company's financial situation, including income, outgoings, and debts, our panel of advisors can run through all of this with you.
02
Then you should see if a CVL is the right debt solution for your business.
03
If they recommend a CVL, they'll give you information on how to apply, and explain the risks and benefits of a Company Voluntary Liquidation.
Other Business Debt Solutions to Consider:
A CVA is short for a Company Voluntary Arrangement
Provide some relief from debt repayments.
Debt Solutions for Sole Traders...
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