Creditors' voluntary liquidation
Creditors' voluntary liquidation (CVL) is when a company or limited liability partnership (LLP) cannot continue its business because of its liabilities.
Resolutions for winding up
A company can hold a meeting to vote by special resolution for it to be wound up voluntarily.
Once the resolution by the company for a winding-up has been passed, the company must:
- send a copy to the Registrar of Companies
- hold a meeting of its creditors - although it is common practice for the meetings of members and creditors to be held on the same day
This gives creditors the opportunity to:
- question the directors of the company as to the reasons for the failure
- put forward an alternative liquidator
One of the directors or designated members must be at the creditors' meeting and preside over it. If they do not attend, the creditors can appoint someone else to preside. If a liquidator has been nominated by the company, they must be at the creditors' meeting and report on any action they have taken in the period between the meetings.
Once appointed, the liquidator takes control of the company and its assets.
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