It’s a sad day when your company’s debts reach a point where business insolvency becomes a necessity. However, things may not be as bad as they seem. For a company with mounting debts and insufficient money coming in to cover them, insolvent liquidation may turn out to be the best option for a company.
The Business Insolvency Experts here at Crewe-based Business Recovery Company, MGJL, have touched on the two main insolvent liquidation processes below:
Creditors’ Voluntary Liquidation (CVL)
The most common insolvent liquidation process is a CVL. This involves the company’s directors appointing a private sector Insolvency Practitioner to complete the steps to place the company into CVL.
On appointment, a Liquidator, will get in and sell the company assets if appropriate, deal with the company creditors, investigate the events leading up to the liquidation and distribute surplus funds to creditors.
Compulsory Winding Up
The other form of insolvent liquidation is Compulsory Winding Up. This is a Court process usually initiated by the creditors themselves; a winding up petition if lodged at Court. The Court confirms a hearing date for the Court to decide if the company should be wound up. If the Court is satisfied that the company has failed to satisfy payment requests a winding up order ought to be made.
On the making of a Winding Up Order the Official Receiver is appointed to deal with the initial stages of the liquidation, should there be assets to be dealt with, the Official Receiver may look to make an appointment of a private sector Insolvency Practitioner to act as liquidator.
All information is intended solely for informational purposes and should not be used as a substitute for specific professional advice.