Company debt solutions

A Creditors’ Voluntary Liquidation (CVL) is the process in which an insolvent company is formally placed into liquidation. Going down this route means your company will cease to trade, but it is almost certainly better to go down this route rather than to wait for one of your creditors force your company into compulsory liquidation.

A CVL acknowledges your legal duties as the director of an insolvent company. You will then be able to have a fresh start – perhaps getting a PAYE role in another company or starting up a new business.

A CVA (Company Voluntary Arrangement) is a process where your insolvent company enters into a formal agreement to pay its creditors a sum of money towards what it owes. There is typically a reduction in the total amount that is paid back to the company’s creditors, and duration of the CVA is typically 5 years.

The company would continue to trade. So this option is only viable if it is believed that the company can become solvent again.

The typical situations for using the pre-pack admin option are:

• the company has cashflow problems
• the company can’t afford to pay its creditors
• there is a possible buyer for the business
• there is a realistic likelihood that the purchasing company can make a success of the business
• the business’s value would decline if it was first placed into some form of insolvency procedure and then marketed for sale
• liquidation is not an option

 
However, this option is only available in certain circumstances.

Even if your company is struggling with late payments, increased overheads or a dip in market conditions, you may still be able to turn the situation around without the need of an insolvency solution.

However, it is always best to seek professional advice to make sure that you are not putting ‘good money after bad’.