There are two main situations when you might be thinking about voluntarily liquidating your company:
- your company is insolvent (i.e. it can’t pay its bills when they’re due) and you’re thinking of closing it down
- your company is solvent (i.e. it has no debts that it can’t pay), but you don’t want it any more
Insolvent Liquidation (CVL)
An insolvent liquidation is formally known as a Creditors’ Voluntary Liquidation (CVL). This occurs when shareholders and directors agree to place the company into liquidation because it can no longer pay its bills when they are due; and creditors are chasing for payment. This is the most common form of liquidation in the UK.
In a CVL all trading ceases and any company assets are sold. A CVL is typically used when:
- your creditors are chasing for money to be repaid and you’d like to avoid your company being forced into liquidation (i.e. put into Compulsory Liquidation)
- you want to protect your personal finances from business debts
- your company is showing no signs of recovery
- you want to avoid any accusations of wrongful trading.
Solvent Liquidation (MVL)
A solvent liquidation is formally known as a Members’ Voluntary Liquidation (MVL). It is a process that enables the directors to appoint a liquidator to formally close down their solvent company when they no longer want it.
In the MVL process the liquidator / Insolvency Practitioner releases all the company’s assets and ensures there are no outstanding liabilities; and the company money is distributed to the shareholders.
An MVL is typically used when you no longer want, or need, your company because:
- you want to retire
- you’re taking up an employee role (perhaps because of the changes to the IR35 rules)
- you’re moving abroad.
The next step for you
We can help you with whichever type of liquidation you’re considering for your company – an MVL or a CVL.
Give us a call for your free and confidential liquidation advice on 0161 907 4044, or email [email protected].
When you appoint us to liquidate your company, you can be assured that you will get a very professional and affordable service.
