Company Voluntary Liquidation
Is your business is facing financial difficulty and suffering from cash flow problems? Are you struggling to pay suppliers and other commitments like rent or rates? Are you in arrears with HMR&C for VAT or PAYE or currently unable to make these payments? If this situation sounds familiar, you may need to contact a Licensed Insolvency Practitioner (“IP”) for professional advice on your business’ finances and the recovery options available.
The initial consultation with Adcroft Hilton Ltd is free and will provide you with impartial and objective advice onyour current situation so that you can make an informed decision based on your circumstances.
We will epxlain the insolvency options available and advise you on the best way forward. However, the decision is ultimately yours.
Creditors Voluntary Liquidation (“CVL”)
Pre –liquidation matters
Initial notices will be sent to members and creditors notifying them of your intention to place the Company into Creditors Voluntary Liquidation.
If the Bank has a Debenture (security over the Company’s assets), also known as a fixed and floating charge, then the Bank must be given at least 5 business days’ notice of the intention to place the Company into Liquidation. This notice period gives the Bank the opportunity to approve your choice of Liquidator, nominate their preferred Liquidator, or appoint an Administrator.
The shareholders must be given at least 14 days’ notice but the notice period can be reduced if most of the shareholders consent to short notice. This requires at least 90% in value and a majority in number of the shareholders to agree.
The creditors must be given at least 7 days notice of the creditors’ meeting. It is normal practice to hold the shareholders’ and creditors’ meetings on the same day, but the meeting of creditors can be held up to 14 days after the shareholders’ meeting. unless the Centrebindprocedure is considered necessary. Is it necessary/sensible to use the term ‘Centrebind’? layman won’t have a clue, explainface to face
The shareholders’ meeting may be held earlier than the creditors’ meeting if there is an urgent need to protect the business assets. For example, if a bailiff is threatening to distrain on the assets.
Once we have been instructed, we will arrange for the assets to be independently valued by an agent instructed by us. At all times, as a Director, you have a duty to protect the assets of theCompany.
The Directors have to submit a Statement of Affairs of the Company and a Report for the meetings. We can draft these for you to ensure that you present the relevant information to creditors, but it is still your responsibility to confirm the accuracy of the financial information and other content included.
At the shareholders’ meeting, a special resolution is passed placing the Company into CVL and appointing the IP as Liquidator.
The creditors’ meeting confirms the appointment of the IP as Liquidator or appoints another IP. Creditors also pass resolutions agreeing the basis of the Liquidator’s fees and other costs.
Post Liquidation matters
Following the creditors’ meeting the Liquidator will write to all the company’s creditors to notify them of the outcome of the meetings and send them a copy of the information presented at the creditors’ meeting.
The Liquidator will realise the assets of the Company and has a duty to maximise realisations for the benefit of creditors. If there are sufficient funds, the Liquidator will distribute the amounts realised (after costs) to creditors, according to the priorities set out in The Insolvency Act 1986. Any arrears of wages and holiday pay rank as preferential claims, and are paid in full before any distributions are made to trade creditors and HM Revenue & Customs.
As well as realising the assets and making distributions to creditors if possible, the Liquidator has a duty to investigate the conduct of the Directors. This is to establish whether the company has been managed properly. Any unfit conduct has to be reported to the Disqualification Unit of the Insolvency Service, which is responsible for bringing disqualififcation proceedings if appropriate.
Please note that the above narrative is merely a brief explanantion of the CVL process. For further information or to make an appointment to discuss your options please contact this office. The earlier you decide to get professional advice the more choices you have available.
