Creditors Voluntary Liquidation (CVL)

Creditors’ Voluntary Liquidation (CVL) in Northern Ireland

A Creditors’ Voluntary Liquidation – also known as a CVL – is the most common formal limited company insolvency process in Northern Ireland.

As the name suggests, a CVL is a voluntary process which is entered into by the directors of an insolvent limited company once it becomes clear that the company’s financial problems have taken it beyond the point of rescue.

As part of the liquidation, an insolvency practitioner is appointed to oversee the whole process and it is their job to identify company assets, liaise with outstanding creditors, and finalise the winding up of the business with Companies House.

Any assets belonging to the company will be sold with the proceeds being used to repay outstanding creditors as far as possible. Unfortunately, due to the company being insolvent, there will not be enough money to repay all creditors in full. As a limited liability company, however, directors will not typically find themselves liable to cover this shortfall.

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Once a company has gone through the CVL process, it ceases to exist as a legal entity. This means any debts which remain outstanding following the sale of company assets will effectively be written off. This includes debts owed to HMRC, trade creditors, as well as any money owed to any shareholders or directors.

The exception to this is any company borrowing which has been secured by a personal guarantee. Upon the liquidation of the company, any active personal guarantees will crystalise and the remaining balance of any personally guaranteed loans will be assigned to the guarantor. This means that if you have given a personal guarantee, you will find yourself responsible for repaying the borrowing following the liquidation of the company.

At Northern Ireland Debt Solutions, our licensed insolvency practitioners are able to advise on personal as well as company insolvency processes, therefore if you do become liable for a personally guaranteed loan which you are unable to repay, we can talk you through your options here too.