What is Liquidation?

A company enters into liquidation by either action taken by the directors and shareholders or through a court process where a Winding Up Order is made. Where at the behest of the board and shareholders these process are referred to either as a Members Voluntary Liquidation (MVL) if a solvent liquidation or a Creditors Voluntary Liquidation (CVL) if insolvent.

A CVL is a procedure whereby the shareholders at the request of the directors places a company into Liquidation in order to facilitate an orderly wind up of the company’s affairs. The decision to initiate a CVL process is usually when the company has run out of cash, is unable to pay its debts on time and the directors believe the business is no longer viable. A CVL is designed to realise the assets of the company and distribute proceeds to creditors.

Key Points about Liquidation

  • It is important to clarify that it’s not just a short term cash flow problem as this can be rectified by securing more finance
  • The decision to appoint a Liquidator is passed by resolutions of the shareholders and ratified by creditors
  • The Liquidator takes control of the company’s affairs, realises the company’s assets and then distributes those proceeds to creditors

Let’s Talk

For more information on an Liquidation, we offer an initial free consultation to review the situation and make recommendations on the best way forward. If we think that an Liquidation is the best route forward, our specialists can support you at every step of the way through the process. For a no obligation chat, complete the form opposite, include a best time for us to call you and a Partner will be in touch.


Alternatively, book a convenient time for us to contact you