Seamlessly Transition Through Creditors' Voluntary Liquidation(CVL).

Once a company enters a Creditors’ Voluntary Liquidation (CVL), it stops trading and a insolvency practitioner takes control. The practitioner oversees the liquidation of debts, sells company assets, and distributes the proceeds to creditors. After the process is complete, the company is formally dissolved and removed from the Companies House register.

For directors, their responsibilities officially end, though they may still need to assist the liquidator. As part of the process, the liquidator will review whether director legal responsibilities were met during the period of financial difficulty.If directors acted in good faith and within the law, they typically face no consequences. However, if misconduct like wrongful trading or misfeasance is uncovered, they could be held personally liable or disqualified. In most cases, where directors have acted responsibly, they can move on and start a new business.

Step 1: Directors Realise It’s Time to Close the Business

When a company becomes insolvent and can’t pay its debts, the directors may decide to strike off the company or opt for a Creditors’ Voluntary Liquidation (CVL). They consult a licensed insolvency practitioner (IP) to review the company’s situation and prepare the required documents, including the statement of affairs, which shows the company’s assets, debts, and creditors.

Step 2: Shareholders Agree to Liquidate

A shareholders meeting is called where the company owners vote on whether to liquidate. To move forward with a CVL, at least a 75% shareholder agreement (by value of shares) is required. If approved, the company officially chooses to go into liquidation.

Step 3: Creditors Are Notified and Given Key Information

Within 15 days of the resolution, the company must send the resolution to Companies House and inform its creditors. Creditors are provided with the statement of affairs and other key details so they can approve or challenge the process.

Step 4: Appoint a Liquidator

At the same time, the company must appoint a liquidator, usually the same insolvency practitioner who guided the process. The liquidator now takes legal control of the company, and the directors' powers come to an end.

Step 5: Company Assets Are Sold

The liquidator’s role includes selling company assets—such as property, vehicles, stock, or equipment—to raise funds for paying off debts. These proceeds form part of the return to creditors.

Step 6: Paying the Creditors

The liquidator distributes the available money in a strict order: first to secured creditors, then employees and HMRC, and finally to unsecured creditors. If there’s anything left, shareholders may receive a share, though this is rare.

Step 7: Company Is Dissolved

After all investigations, payments, and reporting are complete, the liquidator files final documentation. The company is formally dissolved and struck off the register at Companies House, bringing the process to an end.

• Director Control – Directors initiate the process and choose the insolvency practitioner.
• Stops Creditor Pressure – Halts legal actions, bailiff visits, and demands from creditors and HMRC.
• Debts Are Written Off – Most remaining unsecured debts are cleared after liquidation.
• Fulfils Legal Duties – Demonstrates that directors are acting in accordance with their legal responsibilities.
• Reduces Risk of Wrongful Trading – Early action helps avoid personal liability for continuing to trade while insolvent.
• Director Redundancy Eligibility – Directors may claim redundancy pay if they meet certain criteria.
• Orderly Business Closure – The company is closed professionally under a formal legal process.
• Less Reputational Damage – Voluntary liquidation is viewed more positively than compulsory liquidation.
• Peace of Mind – Directors can move on without ongoing creditor pressure or uncertainty.
• Clear Communication – Creditors are kept informed with a structured process and Statement of Affairs.

At Nexus Corporate Solutions Limited, we work closely with directors to resolve financial challenges, manage creditor relations, and ensure a clear, confident path to business closure.