Creditors’ voluntary liquidation (CVL)—basic insolvency principles
Produced in partnership with Robert Smailes of Shipleys LLP
Creditors’ voluntary liquidation (CVL)—basic insolvency principles

The following Banking & Finance guidance note Produced in partnership with Robert Smailes of Shipleys LLP provides comprehensive and up to date legal information covering:

  • Creditors’ voluntary liquidation (CVL)—basic insolvency principles
  • Before appointment of the liquidator
  • The board meeting to resolve to go into liquidation
  • The directors’ role
  • Creditors' meeting
  • After the appointment of the liquidator
  • The liquidator’s role
  • The effect a CVL has on legal proceedings
  • Exit from CVL

On 6 April 2017 the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 replaced the Insolvency Rules 1986 (IR 1986), SI 1986/1925.

For a summary of the changes to CVL’s, see Practice Note: The Insolvency (England and Wales) Rules 2016—Part 6: Creditors’ voluntary winding-up [Archived].

A creditors’ voluntary liquidation (CVL) is a voluntary process initially instigated by a board of directors and is an alternative to the company being wound up by the court on a petition presented by a creditor of the company.

Before appointment of the liquidator

The process is initially commenced with a meeting of the board of directors of the company. At that meeting, the directors (a quorum of which must attend or be present via telephone/internet) must decide, having considered the plight of the company, that it should take steps to place the company into CVL.

Once a decision has been taken by the directors, they must instruct a firm of licensed insolvency practitioners to act on behalf of the company. Unlike a creditor-led winding-up petition, the choice of insolvency practitioners at this stage is a matter for the directors to decide upon. However, the choice of practitioners should not include anyone who has had a material professional relationship with the company and cannot be the current auditors, as it is key that the company’s choice