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Legal 500 | 2020 Edition

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Creditors Voluntary Liquidation

Our insolvency team is experienced in conducting litigation arising from liquidations of all types including:

Our Insolvency Litigation Services | Kangs Solicitors

We understand that being involved in a liquidation is a uniquely stressful and highly pressurised situation.

We guide our clients through the process and aim to use our experience to limit the impact on them as much as possible.

We are able to offer an extensive range of insolvency litigation services to:

  • individuals,
  • companies, and
  • Insolvency Practitioners

Our team of insolvency lawyers is experienced in advising in relation to a wide range of matters including:

  • Transactions defrauding creditors
  • Transactions at an undervalue
  • Wrongful Trading | Fraudulent Trading
  • Preferences
  • Removal or replacement of liquidators
  • Misfeasance claims against company directors
  • Director disqualification

What is a CVL?

  • A CVL is the most common type of liquidation and is usually instigated by the directors because the company is insolvent.
  • Although a court order is not required for a CVL, it is a formal insolvency procedure used in circumstances where the business is unable to meet its debts as they fall due or is close to reaching that stage.
  • The directors, in compliance with their fiduciary duties, take this step to voluntarily ‘wind the business up’.
  • It requires the appointment of an Insolvency Practitioner as liquidator following a meeting of the company directors, shareholders/members and creditors.
  • Once the appointment has been made, the company will cease trading.
  • The Insolvency Practitioner will take over responsibility for the company and the realisation of its assets.

What is the process for a CVL?

  • The first step is a board meeting for the directors to agree:
  1. that the company should be placed into a CVL due to the insolvent nature of the business,
  2. that a meeting needs to be convened for the shareholders and creditors, and
  3. the selection of an Insolvency Practitioner as liquidator.
  • Notices must be served on the shareholders and creditors regarding the meeting.
  • The Notices must be advertised in the London Gazette a minimum of seven days in advance of the meeting.
  • The board of directors has an obligation to continue to trade but at the same time must be mindful to preserve the company’s assets for the creditors which means not:
  1. extending credit facilities to obtain supplies or goods
  2. using any bank overdraft facility
  3. disposing of company assets, unless justified to meet essential costs of running the business
  4. taking steps that would favour one creditor over any other creditors
  5. taking steps that could penalise unsecured creditors in favour of a secured creditor.
  • At the shareholders meeting, a Resolution is agreed to place the company into a CVL and to choose an Insolvency Practitioner.
  1. The liquidation commences on the passing of this Resolution.
  2. The directors cease to have control of the company.
  • At the subsequent Meeting of Creditors, the shareholders choice of Insolvency Practitioner is either agreed or the creditors appoint one of their own choosing.
  • On appointment, the control of the company vests in the Insolvency Practitioner acting as liquidator.
  • The Insolvency Practitioner will take steps to achieve the best market value for the assets of the company and distribute the proceeds to the creditors.
  • The Insolvency Practitioner will also conduct an investigation into the company affairs and its directors to consider whether there is any wrongdoing or breach of fiduciary duties. In order to discharge this duty, the Insolvency Practitioner will require all company officers to cooperate with his requests for information, meetings and interviews.
  • Any adverse findings arising from the investigation can result in:
  1. Director Disqualification Proceedings
  2. civil action, which can include personal liability for directors, or
  3. criminal prosecution
  • Both HMRC and the Secretary of State for Business Energy and Industrial Strategy may have an interest in conducting their own review of the company and its directors which can lead to separate criminal or civil proceedings in many cases.

Who Can I Contact For Help? | Kangs Insolvency Solicitors

We welcome new enquiries by telephone or email.

Our team of expert lawyers is here to guide you in relation to any issues concerning CVL or compulsory liquidations.

We are happy to provide an initial no obligation consultation at our offices in London, Birmingham or Manchester or via video conferencing facilities to explore the issues in your case and to provide an assessment of how we can assist you.

Contact

Mr Stuart Southall | Head of Insolvency Team
ssouthall@kangssolicitors.co.uk
0121 449 9888 | 020 7936 6396

Mr Tim Thompson
tthompson@kangssolicitors.co.uk
020 7936 6396 | 0121 449 9888

Mr Naz Maqsoom
nmaqsoom@kangssolicitors.co.uk
0161 817 5020 | 0121 449 9888

 

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    Birmingham

    2 Wake Green Road, Moseley
    Birmingham, B13 9EZ

    0121 449 9888

    London

    9 Carmelite Street,
    London, EC4Y 0DR

    020 7936 6396

    Manchester

    76 King Street
    Manchester, M2 4NH

    0161 817 5020