A director can propose an insolvent liquidation – also known as a Creditors’ Voluntary Liquidation (CVL) – if a company cannot pay its debts.
On these occasions, a licensed insolvency practitioner (IP) like CG&Co is appointed as liquidator and immediately takes charge after a company’s shareholders pass a resolution to wind that business up. At this point, a company stops trading and is liquidated.
A statement of affairs is subsequently presented to the company’s creditors along with a report which details the directors’ reasons for its failure as well as any deficits on the balance sheet.
The liquidators are appointed by “deemed consent”, which means that creditors don’t have to agree their appointment. Nonetheless, creditors can still request a meeting with both the directors and liquidators under certain circumstances.
“At CG&Co, we’re aware that insolvent liquidation can mean that a company’s directors are liable for some of the costs. But when a responsive insolvency practitioner is appointed escalating situations are quickly contained and – ultimately – resolved. From the start, CG&Co provides clients with complete transparency over our costs so they always know where they stand.”
Edward Gee, Partner – CG&CO