Creditors’ Voluntary Liquidation (otherwise known as CVL) is a common liquidation practice, which occurs when the directors, members or shareholders of a company determine that the business is insolvent, or that it is likely to become insolvent. After recognising insolvency, the company’s directors call a general meeting to propose a resolution for liquidation and make a recommendation that the company be wound up voluntarily. A CVL must be approved by the majority of shareholders.
A CVL can provide insolvent businesses with a clear path towards an orderly closure and, as a result, minimise further financial hardship for the company. A CVL has many benefits including registered liquidators managing the winding up of the company’s business and affairs without a Court order.
In the case that a Creditors’ Voluntary Liquidation is to be undertaken, there is a strict process that we follow at Helm Advisory:
Step 1: The company’s directors, members or shareholders determine that the business is insolvent, or that it is likely to become insolvent.
Step 2: A registered liquidator is appointed to wind up the company’s affairs.
Step 3: The liquidator will secure, realise and distribute the proceeds from the business.The liquidator will also investigate the company’s affairs and its reasons for failure.
Step 4: The liquidator will inform creditors of their rights and deal directly with the creditors to report on the company’s affairs, request proof of debts and answer any questions.
Step 5: Following the completion of investigations and distribution of any property, the liquidator will notify ASIC to deregister the company. Upon deregistration, the company will cease to exist and all unsecured claims will be extinguished.
At Helm Advisory we understand that a CVL can be a difficult decision to make, which is why we’re here to help ease the stress and financial worries that your business is experiencing. Our expert team of insolvency practitioners will assess your situation, explore options including Creditors’ Voluntary Liquidation, and guide you through the process with our reassuring, hands-on approach.