Liquidation
There are a number of insolvency liquidation options available to businesses.
What is a Compulsory Liquidation process?
A compulsory liquidation is a formal process whereby creditors of the company, or the directors can petition the court to issue a winding up order. The Company can defend the petition or make representations at court, should the Company fail to do so or should the court not see merit in the Company defence then a winding up order will be issued and a Liquidator appointed.
What is a Creditors Voluntary Liquidation (“CVL”) process?
A CVL is a formal insolvency process handled by a Licensed Insolvency Practitioner, involving the winding down of an insolvent company. A CVL process is typically initiated when the directors of a distressed company, in agreement with the shareholders, agree to put the business into liquidation in order to pay outstanding debts.
What happens during a CVL or Compulsory Liquidation process?
The Licensed Insolvency Practitioner, known as the Liquidator upon their formal appointment, has a number of roles and responsibilities to undertake, ranging from identifying the company’s assets; liaising with and reporting to creditors on the progress of the liquidation; and ensuring a company is brought to an orderly shutdown.
All liquidations will ultimately result in the Company being struck from the register
Will creditors be paid in full from the CVL or Compulsory Liquidation process?
Creditors are paid from the realisations of the Company’s assets, however, secured and preferential creditors will be first to receive any payment from the liquidation, in accordance with the priority of settlement. Unsecured creditors are treated equally and each receive a share of the remaining balance from the realisation of assets, after the costs of the liquidation have been met.
