If your company is struggling with mountains of debt, you may need to consider Creditors Voluntary liquidation (CVL). Deciding to liquidate your company is not a decision to be taken lightly, and it requires a lot of organisation and planning.
To help you, we have put together this short guide to help you get to grips with CVL. This guide will answer some all-important questions such as – what is CVL? Who can help you? And what are the benefits?
What Is Creditors Voluntary Liquidation (CVL)?
Suppose a business is financially struggling and can no longer manage its piling debts – in that case, the directors of the said company can voluntarily put the business into liquidation to help them pay off its outstanding debts. This process is called a CVL.
Last year, the total number of CVLs in the UK was 12,661. This was significantly higher than the year before. The important thing to remember is you are not alone. Try to see CVL as a new beginning. It helps you deal with your debts, so you can wipe the slate clean and start a new venture in the future.
Who Can Help Me Liquidate My Company?
When making the decision to liquidate your company, it can often feel like you are on your own. If this is your first time dealing with liquidation, you may also require some help. Luckily, support is available from organisations like Future Strategy, who aim to make the process as stress-free as possible.
Organisations like these help you through each step of the process. They aim to give you the best financial outcome possible so you can end your business on a positive note and start with a clean slate. CVL is certainly not something that you have to tackle on your own.
Are There Any Benefits Of Creditors Voluntary Liquidation (CVL)?
There are a few benefits associated with a CVL. Most directors choose this course of action as it helps their company avoid accusations of fraudulent and wrongful trading. Allegations like these can end with disqualifications, followed by hefty fines.
By choosing a CVL, your business shows creditors that you take full responsibility for your finances and want to do what is in their best interests. You no longer have to worry about getting a court order through the door, and you can deal with the matter yourself. It can certainly take off a lot of pressure and stress from business leaders.
When Will My Company Need A Creditors Voluntary Liquidation (CVL)?
When is the right time to petition for a CVL? It all comes down to the financial state of your business. Usually, a CVL is the best course of action when your business can no longer pay its outstanding debts. Rather than choosing a CVL as a first option, you would usually try a rescue strategy first.
Once your company has reached a point where funds have completely run out, it is only then that you should apply for a CVL. Doing this helps you take control of your debt. This method can give you the best possible financial outcome while allowing you to start a new venture further down the line. You can find some top tips regarding starting a new business online.