What is a Creditors Voluntary Liquidation [CVL] – Insolvent?
A formal winding up of a company’s business affairs governed by the provisions of the Insolvency Act 1986. The process is instigated by the directors of the company and the company is actually placed into liquidation by way of special resolution of the shareholders. Following the introduction of the Insolvency (England and Wales) Rules 2016, it is often not necessary for a meeting of creditors to be convened, unless required by creditors in accordance with the statutory requirements.. However, creditors must be provided with information in compliance with the statutory requirements concerning the company’s assets and liabilities and an explanation of the reasons for the insolvency of the company. A Licensed Insolvency Practitioner is appointed as Liquidator and the Liquidator’s main function is to realise assets and distribute monies to the creditors by way of dividend. In addition, the Liquidator must investigate the company’s affairs and make a report to the Insolvency Service on the conduct of any party that has been a director (or acted in the capacity of a director) in the three years leading up to the commencement of the liquidation.
The process is instigated by the directors under the advice and guidance of an insolvency practitioner. We will assist the directors in preparing the necessary documentation so that it complies with the requirements and advise directors of the law surrounding the procedure and their responsibilities.
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