Under what circumstances might you voluntarily liquidate your company?

July 19, 2019 / FAQs

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 info@clarkebell.com.

When you appoint us to liquidate your company, you can be assured that you will get a very professional and affordable service.