What is a CVL?
A CVL is where the directors instigate the procedure. They are effectively holding their hands up and saying the company cannot survive and needs closing. It is a voluntary liquidation and this could take place in as little as 11 days from the day the decision is made to liquidate, but is typically about 3-4 weeks. There is a lot of red-tape that goes with this, but we have streamlined this as much as possible to carry out an efficient and timely service.
This is the most common insolvency procedure. It is a relatively complicated procedure, but we have streamlined it as much as possible to take the complexities out of it. We will support and guide you through this.
How does it work?
Our Insolvency Practitioner is involved with the case from your first phone call right to the end. She is extremely experienced in this area (has liquidated over 1,000 Companies) and is extremely approachable and empathetic.
We will assist with any redundancies that may need to be made and ensure that your employees are fully aware of the situation and how it affects them. We will also assist them in claiming any monies due to them for wage arrears, holiday pay, pay in lieu of notice and redundancy pay from the Redundancy Payment Fund. We will also work with the jobcentre if there are a large number of redundancies.
We will try to minimise the amount of time that we ask a director to spend on this by ensuring that we get the information about the company, the creditors and the assets so we can prepare all the necessary paperwork.
What is the procedure?
A CVL starts with the directors taking the decision to liquidate the company. They will sign board minutes declaring this and will summon a meeting of the shareholders and creditors. At least 3 full days notice is required for creditors (plus postage days allowed).
The shareholders meeting will be held just before the creditor are given the opportunity to vote on the decision to appoint a liquidator and the shareholders will pass resolutions to put the company into liquidation. The vote of creditors is usually conducted by way of a virtual meeting, however a physical meeting can be requested by creditors and if requests collectively exceed 10% in £ value, 10% in number of creditors or more than 10 in number, then a physical meeting will be convened. The creditors meeting will then be held (either virtually or physically) and a director will attend. The creditors will vote on who they want to be liquidator and they may form a committee of 3 to 5 members who are representing the general body of creditors.
If a committee is formed, they will decide how the liquidator will be paid. If there is no committee, the general body of creditors will set the fee of the Insolvency Practitioner.
In order to make informed choices, there is certain information that is presented to creditors. This includes a report containing the following:-
- Statutory information
- A brief history of the company and how it has ended up in the position it is in
- Extracts from accounts (usually three years if available)
- A statement of assets and liabilities as at the date of the meeting (called a statement of affairs) – usually with notes
- A deficiency account trying to reconcile the difference between the accounts and the statement of affairs
- A fees and expenses estimate
- A material transactions report (if appropriate)
The report will provide an indication of whether the creditors will receive any monies from the liquidation, known as a dividend.
Following on from the meeting, the liquidator will realise any cash at bank, plant and machinery, book debts and retentions, vehicles and any other assets.
The liquidator will also have a submit a statutory report to the Insolvency Service to either state on record that they have either not found issues of concern regarding the directors conduct or that they have found actions that they feel they need to report. The Insolvency Service will then take the decision of whether to take this further (or not).
When all assets are realised, all investigations are complete and any dividends paid, the liquidator will send a final report to creditors. If the company is not closed within one year, the liquidator will provide annual reports to creditors.
How much does it cost?
The fees of a liquidator will be drawn from the amount of monies realised from the assets. Usually an Insolvency Practitioners fees will be spent on time properly spent on that liquidation at a rate set and circulated to creditors. The amount of time will depend on the complexities of the case, any investigation findings, the amount of creditors, other matters such as pensions and many other things. At Revive Business Recovery we have set our rates at a low level so we are fair to the company and its creditors.
We will cap fees on liquidations at agreed levels to ensure that debenture holders will receive a dividend if this has been personally guaranteed by a directors.
If there are insufficient assets in a company to cover a liquidators costs, and directors or shareholders are willing to contribute to the liquidators fees, then we will do a liquidation of the company from £5,000 plus disbursements plus VAT.
If you are thinking of liquidating your company, please contact us on 01302 965485 or fill in our form and we will get back to you.