Creditors’ Voluntary Liquidations

When insolvent, closing a company responsibly

This is the most common form of liquidation and brings to an end the operation of the limited company.

Often when a business is insolvent, and does not have enough money to pay its debts as they fall due or its liabilities exceed its assets, the only appropriate course of action is to place the company into liquidation. Directors owe a duty of care to creditors to take all steps to minimise loss to creditors and not allow the position of creditors to worsen. Trading whilst insolvent can breach provisions of the Insolvency (Northern Ireland) order 1989 and may make directors personally liable to contribute to the assets of a company.

The costs associated with placing a company into CVL are in most cases paid from the realisation of the company’s assets.

We can advise and assist directors to ensure they meet their obligations should their company become insolvent, assist in placing the company into liquidation and act as liquidators (albeit the majority of creditors have the ultimate right to decide who acts as liquidator).  The liquidator takes control of the company and liaises with lenders, landlords, creditors and staff through the liquidation period. 

Directors of an insolvent company should also seek professional advice as early as possible to safeguard against potential legal actions against them under the provisions of the insolvency legislation.